Weekly Market Prep & Analysis - 11/2/26

Quick update on me before we get into the market. Recovery is finally gaining a little momentum. I am still limited, and there is plenty of rehab left, but January is now the target for getting back to full capacity. Thank you again to everyone who has continued checking on me and sending well-wishes. I appreciate it more than you know.

Trading went well last week despite the limitations. I had a few good trades, capped by a 63% winner on Friday, and patience on entry was probably the most consistent thing across them. More than once, the first move looked perfectly tradable and I passed on it anyway. I liked what developed afterward better. Election week arrives with $SPY ( ▲ 0.3% ) implied volatility sitting roughly between 15 and 17, so I expect that patience to remain useful.

Some of what follows will sound familiar if you read last week's plan and Thursday's special edition. I spent quite a bit of time discussing midterm volatility, the 2022 election week, the Fed decision, Treasury yields and how I adjust short-dated options when implied volatility rises. I am going to touch on some of it again because election week is finally here, but I would encourage you to read those two pieces if you want the longer version. There is also enough new information since Thursday to move the conversation forward.

The election is Tuesday. September JOLTS is released at 10:00 AM the same day, although the election will obviously own most of the attention once the cash session ends. ADP employment is Wednesday morning, followed by the Treasury's quarterly refunding announcement. Weekly Claims and Q3 productivity arrive Thursday, and October payrolls close the week Friday morning. Apple $AAPL ( ▼ 1.9% ) reports Monday evening, AMD $AMD ( ▲ 3.65% ) reports Tuesday and Qualcomm $QCOM ( ▲ 1.45% ) reports Wednesday, keeping technology in focus after an ugly end to October. More than 100 S&P 500 $SPX companies are scheduled to report this week.

Friday's employment report probably carries the most weight for rates. September added only 29,000 jobs while unemployment held at 4.2%, and current estimates are around 65,000 jobs for October. The Fed just described economic activity as strong, two members wanted another hike last week, and another December increase remains heavily priced. A meaningful surprise in either direction can move those expectations quickly.

As a refresher from Thursday's special edition, the Fed held rates at 3.75%-4.00% last week after raising them in September. The vote was 10-2, with Lisa Cook and Beth Hammack preferring another 25-basis-point increase. Q3 GDP then came in at 3.4%, headline PCE at 3.6%, and core PCE at 3.1%. December remains very much in the conversation.

The more interesting development since then has been the bond market.

The 10-year yield peaked above 5.36% on October 7 and has now declined for several weeks, trading around 4.9% as November begins. That is a meaningful move from the pressure we were dealing with earlier in October, especially for $QQQ and the other rate-sensitive parts of the market. The Fed paused, another hike remains possible, and the long end still managed to move substantially lower.

Wednesday's Treasury refunding adds another piece. Treasury increased the maximum size of some longer-duration liquidity-support buybacks during the previous refunding period and said it would provide another update on November 4. I have written enough about Treasury supply and buybacks this year that most of you already know why I will be watching. The long end has been one of the more persistent headwinds surrounding equities, and the recent decline in yields has taken some of that pressure off without resolving the larger question around deficits and Treasury supply.

Technology has been dealing with a different problem at the same time.

The S&P 500 technology sector fell 6.8% in October, its worst month since March 2025. Friday alone took another 4.2% out of the sector while $SPX fell 1.8%. Alphabet $GOOGL, Amazon $AMZN and Intel $INTC all added to the concerns surrounding AI spending, financing and whether the enormous capital commitments being made across the industry will produce enough return.

The rest of the market did not follow technology point for point. Nine of the eleven S&P sectors finished October higher, more than 70% of S&P 500 $SPX companies gained during the month, and small- and mid-cap indexes advanced. $SPX finished the month down less than 1% despite the damage in technology.

That expands on the breadth discussion from last week. $QQQ has been known to lead $SPY recently, but October also showed how much rotation can take place underneath the headline indexes. Technology can struggle while other areas continue holding up. My interest increases if that broader participation starts deteriorating alongside $QQQ because $SPY would have considerably less support underneath it.

Friday moved us a little closer to finding out. Technology accelerated lower and $SPX closed below its 100-day moving average for the first time since April. I will be watching whether the areas that held up while technology was getting smoked continue to do so this week.

Then there is the election.

I went through the historical numbers in detail on Thursday, so I will keep the refresher brief. Midterm years have often been more volatile before Election Day than afterward. Since 1974, $SPX has averaged about 1.7% from August 1 through Election Day, compared with 5.7% over the following three months and 12.4% over the following six months.

Most of you also remember the 2022 example by now. Two mornings after those midterms, cooler CPI changed expectations around the Fed almost immediately and $SPY went through roughly a 20-point repricing around that morning and session.

The environment looked considerably worse then. Inflation was above 7%, the Fed was hiking 75 basis points at a time and equities had already spent most of the year in a bear market. Price still moved violently in the opposite direction when the information changed.

This year's election arrives with a different list of variables: another possible Fed hike, long yields falling from their October highs, technology coming off its worst month in more than a year, an increasingly expensive AI buildout and plenty of uncertainty around spending, deficits, Treasury issuance, energy and regulation.

I have also seen the chatter circulating this morning around Tucker Carlson's claim that Netanyahu is pushing the Trump administration toward a nuclear strike on an Iranian site. I have not seen enough beyond the claim itself to make that part of my market thesis, but the broader Middle East situation is obviously worth keeping an eye on. U.S.-Iran negotiations remain unsettled, renewed strikes are still being discussed publicly, and the Strait of Hormuz remains part of the risk around energy markets. I will monitor it along with everything else this week rather than try to trade the rumor itself.

Oil has already been sensitive to every shift in that story. Brent recently traded above $116 while tensions increased and then fell sharply again as hopes for diplomacy improved. That kind of movement can change inflation expectations and Treasury yields quickly enough that I want the geopolitical headlines on the screen even if I have no interest in pretending I know how the conflict develops from here.

Now let's bring all of this back to the charts.

The Daily $SPY chart has spent more time in the lower half of the larger range, and Friday pushed price almost directly into the area we have been discussing for weeks. The upper Rangefinder Rails currently sit at the 764.43 Anchor Rail, 766.94 Live Rail and 768.42 Pressure Rail. Underneath price, the 752.28 Live Rail, 750.80 Pressure Rail and 749.81 Anchor Rail sit directly around The Hole.

The market has repeatedly shown an aversion to everything underneath roughly 750. Friday added another example. Sellers drove $SPY from the upper 760s through 760, through 756 and eventually into the lower Rangefinder Rails. Price traded near 750 and recovered toward the upper 750s before the weekend.

The 4-hour chart shows why I added 756.15 as the “Don't Get Comfortable Short” area.

A trade to the downside from weakness in the upper part of the range has room underneath it. By the time $SPY is already trading underneath 756, price is approaching the lower Rangefinder Rails and the same broader area that has repeatedly produced aggressive responses.

The 65m chart makes the comparison easier. I marked the earlier reaction around 758.68, and Friday's move carried considerably deeper before reversing near 750. Those reactions did not occur at the exact same price, but they developed in the same broader portion of the range.

If I am holding puts underneath 756.15, I am looking over my shoulder. Around the 752.28, 750.80 and 749.81 Rails, I will probably protect the trade even more aggressively. I would avoid overstaying much of anything during election week, but especially a trade to the downside after $SPY has already covered several points and entered an area that has repeatedly rejected sustained trading underneath 750.

Friday reached the area and price responded. If another attempt carries through the lower Rails and volume begins building underneath them, I will have something different to work with.

The 15m chart is where the patience from last week comes back into the conversation.

Monday's premarket high is 760.17, Friday's high is 761.46, and the premarket low is currently 758.14. The 756.15 area sits just underneath it.

Several of my better entries last week came after I passed on a perfectly reasonable first opportunity. Sometimes I preferred the retest. Sometimes I wanted another level cleared first. Sometimes another ten or fifteen minutes changed the location enough that I liked the trade considerably more. Friday's 63% winner finished the week on the same theme.

For a trade to the upside Monday, I will heavily weigh what happens around 760.17 and 761.46. If buyers work through both, I am more interested in the pullback afterward and whether buyers remain aggressive around the retest. Above there sit the 764.43 Anchor Rail, 766.94 Live Rail and 768.42 Pressure Rail.

To the downside, the premarket low is the first immediate reference, followed quickly by 756.15. I can trade puts through that area if sellers remain aggressive, but the location changes quickly as $SPY moves toward the lower Rails. I do not want a good trade to the downside turning into a bad one because I spent the entire move asking it for more.

Tuesday night could change every one of those immediate references before Wednesday's open. The previous midterm cycle already showed this community how much distance $SPY can cover before the cash session when expectations change quickly. Wednesday's premarket levels will matter more to me than trying to preserve Monday's levels after the market has moved several points overnight.

The bond market remains on the screen with $SPY and $QQQ. If yields move higher while $QQQ remains weak and breadth starts deteriorating outside technology, I will have more headwinds supporting trades to the downside. If the 10-year continues lower, $QQQ begins recovering and the broader market continues holding up, I will be much more interested in how sellers behave when $SPY approaches the lower Rangefinder Rails.

Friday's payrolls can alter that combination again. A stronger report arrives after the Fed described growth as strong and two policymakers already preferred another hike. A weak report lands in a labor market where hiring has slowed considerably even though layoffs remain relatively low. I will be watching Treasuries, $QQQ and $SPY together once the number is released.

In summation, much of the framework for this week should already be familiar because I spent most of last week preparing for it. Midterm volatility, the 2022 comparison, the Fed decision, short-dated options and the premarket/previous-day framework were all covered in detail.

Since then, technology finished its worst month in more than a year while most S&P sectors finished higher. The 10-year has fallen considerably from its October high above 5.36%. Treasury updates its refunding plans Wednesday. $SPY has moved deeper into the lower half of its larger range, and Friday produced another aggressive response from the same broader area surrounding 750. There is also fresh geopolitical chatter around Iran that I will keep an eye on because the Middle East remains capable of moving energy markets quickly.

The 756.15 Don't Get Comfortable Short area sits directly above the 752.28, 750.80 and 749.81 Rangefinder Rails. If price trades down there again, I will pay close attention to whether sellers are still making progress or whether price begins responding the way it has on previous trips into The Hole.

To the upside, 760.17 and 761.46 are the first prices on my screen Monday morning. Last week rewarded me several times for waiting until I preferred the location instead of taking the first reasonable entry. I expect there will be more opportunities to do the same this week.

As always, trade smart. - SP