Good morning and Happy Columbus Day. Here is today’s full length Opening Look piece - a very important one given last week’s price action.

Key Points
With the S&P 500 emphatically breaking its 48-day streak of no 1% declines with Friday’s near -3% drubbing, the burning question, of course, is whether this was a one-day shakeout or the start of a more meaningful correction. Today’s piece will focus squarely on that, drawing on numerous charts across the market landscape.

Last Five Trading Days

Daily Price Action
Friday’s 2.7% decline marked the eighth loss of at least 2% in 2025. The 15% of advancing stocks was the worst breadth reading since 10% on July 15.

For some perspective, the worst breadth of the year was just 3% of advancing stocks back on April 4, when the S&P plummeted 6% in a single day. Of course, that came near the end of the “tariff tantrum”, but the following week showcased the greatest amount of two-way volatility in years — both up and down.

It’s all about the follow-through now…

Sectors
Consumer Staples led the sectors on three of five trading days last week, including Friday. It was the only sector to stand out, as both Staples and Utilities managed positive breadth.

By contrast, Technology was hit hard, down 4% — with zero of 68 components advancing. However, the equal-weight Technology ETF actually performed even worse. In other words, it wasn’t just the big names dragging the group down.

Index Breadth
In fact, small caps were hit the hardest, with only 7% of the Russell 2000 advancing on Friday.

Best & Worst 20 ETFs
As we’d imagine, the safe havens outperformed on Friday — with volatility spiking and bonds rallying. Otherwise, there really was no place to hide.

Best & Worst 20 ETFs – Weekly
For the week, it was a similar story, given that most of the action occurred on Friday. Metals continued to outperform. Crypto was the worst performer by far, followed by Energy, select Tech, and Financials.

Volatility Leads to Big Bullish Patterns
As we know, the S&P 500’s last major pattern target of 6,745 was hit on Friday, October 3, 2025 — marking the fifth successful bullish pattern since the April lows.

That was obviously constructive, but the negative was that it left no additional bullish patterns in play. (The small cup-and-handle that followed — visible only on the 2-hour chart — stayed active for just a few days. More on that below.)

The solution to finding new, major bullish patterns is always the same: a period of elevated volatility. This, of course, has happened countless times throughout market history.

Before Friday’s plunge, the last significant volatility spike occurred between February and April, setting the stage for those five bullish patterns that followed from the April lows.

We last saw this same dynamic play out during Feb–Mar ’23, Aug–Oct ’23, and July–Aug ’24. Yet each bout of corrective price action failed to derail the long-term uptrend. Instead, every setback simply set the stage for a new bullish patterns and the next up leg.

The most recent rebound produced the largest cluster of bullish patterns since the 2022 recovery. In fact, in the past few months, targets have been reached at a much faster pace — a dynamic not seen since the COVID rebound.

We’re not suggesting a correction is guaranteed again now for the S&P 500. In fact, many individual stocks are already down more than 10% from their highs, particularly after Friday’s sharp rollover.

Thus, if today’s early strength manages to see follow-through this week, the next set of bullish patterns could begin to build once again.

Pattern Scenarios
Needless to say, the latest, small bullish formation was swiftly negated with Friday’s huge decline…

With the pattern slate now completely clean, the market faces a key decision point — the next consolidation phase will ultimately resolve either to the upside or the downside.

Any failed rally attempt here would create a lower high, which, when combined with the recent price action, would make this latest setup appear increasingly bearish.

As we know, though,, we’ve yet to see a breakdown through any meaningful support, as shown by the blue arrows. Each time it looked like momentum was about to roll over, it quickly reversed back to the upside.

Conversely, a higher low from this point would simply make this latest dip be just that – a dip – which could help construct the next bullish formation.

Which side has the edge? Here’s a very good take:

“Remember, the best, most durable bull market runs are those which occasionally buck its riders and throw off the weakest and the most aggressive chasers who get trapped, of which there have been plenty in recent weeks as the market continued its impressive climb.” Charles E. Kirk, The Kirk Report

Key Levels
If the S&P 500 fails to build on today’s early strength, here are a few key downside levels to keep in focus.

Short-term
Not surprisingly, Friday’s sharp loss knocked the 14-period RSI on the 2-hour chart back into oversold territory. Despite the 2.7% decline being the worst since April, the peak-to-trough move only reached –3.2%, which doesn’t stand out compared with the recent drawdowns seen over the past few months.

To keep this pullback “in line” with prior, more benign corrections, the next bounce will need to push the RSI back into overbought territory — ideally confirming that momentum remains intact within the broader uptrend.

Negative Outside Weeks
A few studies like this one have popped up after Friday. Nautilus Research notes that an outside negative week (like last week) led to rebounds the vast majority of the time two weeks to three months later.

GoNoGo Trend – Daily
The GoNoGo trend remains bullish despite Friday’s plummet. As we know, the SPX has seen seven countertrend sell signals (red arrows) up to this point. None of these have resulted in a NOGO signal yet…

GoNoGo Trend – Weekly
We are now in week SEVENTEEN of the GoNoGo “weekly bullish” trend. This is nothing new—we’ve seen major comebacks become more consistent after the S&P 500 breaks out to new all-time highs, with many months of continued upside occurring at various points over the last 15 years.

But we’ve now had two straight Weekly red arrows (counter-trend signal), which is something we’ll be monitoring.

Sectors – Weekly Performance
For the week, Utilities outperformed by a wide margin, with eight of the S&P 500’s eleven sectors losing at least 2%. Notably, XLK (Technology) was actually the fourth-best sector, even though it fell 2% on the week.

Meanwhile, Energy was the worst performer for the second straight week, now having declined at least 3% in back-to-back weeks.

XLU Utilities
XLU has continued to benefit from bullish formations, and last week it hit its latest upside target near 91. This, of course, reflects the strong move that’s been underway since early September.

Zooming out to the weekly chart, XLU still has another upside target above 95. It’s done a remarkably good job over the past few years of leveraging bullish weekly formations — and this is now the third such pattern in play, with the prior two already achieving their respective targets.

VIX
Here’s a look at the biggest VIX moves going back to the summer of 2024. Most recently, from the September low to Friday’s high, the VIX has surged more than 50% — a strong move, as this chart clearly shows.

That said, the S&P 500 typically isn’t meaningfully affected unless the VIX rises much more sharply. In past instances when the VIX jumped at least 80%, those moves coincided with the market’s sharpest downturns.

So, if this current spike marks the peak of the VIX, it would likely align with another short-term bottom in equities, echoing the pattern we’ve seen since the April low.

Another perspective is this: big picture–wise, the VIX has been making higher lows since the mid-spring to summer of 2024, even as the S&P 500 has continued to make higher highs. This setup is similar to what we saw in 2021 — and while it didn’t matter for several months back then, the VIX’s series of higher lows ultimately foreshadowed the S&P’s rollover in late 2021 and the broader decline in 2022.

So, this is something to keep in mind. The continued pattern of higher VIX lows suggests that volatility may be quietly building beneath the surface — and though it hasn’t yet had a negative impact on equities, it could eventually do so if the trend persists.

SMH Semiconductors
SMH got hit very hard on Friday, down almost 6%, which brought it back to the lower trendline that began at the April lows, connected through the August lows, and extends to current levels.

We’ve shown this before — it highlights how, despite SMH’s strong uptrend, the ETF has paused several times along the way, with each pause undercutting a key trendline. None of those prior undercuts, however, have led to a complete breakdown in momentum.

This latest move comes after the RSI reached the mid-80s, as discussed last week, so it’s not surprising to see a pullback here. The key now is how the ETF behaves after testing this latest support line.

Of course, we’ve seen this before — the setup looks very similar to the 2020–2021 period, when SMH undercut or broke below roughly ten different uptrend lines before one of them finally signaled a true momentum turn. As we know, that ultimately occurred at the start of 2022.

10-Year Yield
With traders fleeing to bonds on Friday, the 10-year yield closed just above 4%, continuing its pullback toward a key trendline drawn from mid-2022. Needless to say, further pressure on yields could eventually break this uptrend line, which in turn would open the door to more downside in rates — and higher prices in bonds.

IEI – 3-7 Year Treasuries
This has helped create some potentially large basing patterns in Treasury bond ETFs — particularly the IEI (3–7 Year Treasury ETF), which is now flashing one of the most substantial bases we’ve seen in any asset class. It’s worth keeping this one on our radar, especially given that it has very little trend supply overhead.

KWEB China Internet
Needless to say, one of the hardest-hit ETFs on Friday — and for the week — was KWEB (China Internet ETF). We’ve highlighted this one before, noting that it had been forming one of the most constructive basing patterns we’ve seen.

The key now will be to see how eager buyers are to step back in near its most recent breakout point, especially since KWEB fell right back to a key support zone around 37–38 on Friday.

Gold
With gold ripping higher again this morning, the only perspective that truly makes sense is the very long-term quarterly, 50-year log-scale chart. We’ve discussed this one before — noting that, despite the major advance since 2015, and especially the recent surge, gold is still up “only” about 300% from its prior cycle lows. That remains noticeably below the multi-year rallies of the 1970s and early 2000s.

We know that this current pace can’t continue indefinitely, but history suggests the broader rally could persist for years if the behavior seen in those prior secular bull phases is replicated once again.

Bitcoin
With Bitcoin and the broader crypto space getting hit hard late last week, all eyes were on the key support area over the weekend. So far, we’ve seen buying demand step in right where it needed to, once again stabilizing Bitcoin’s structure.

Friday’s sharp decline was reversed almost immediately, allowing the major breakout zone near 109-110k to hold firm. Needless to say, we’d like to see stronger demand continue to emerge, helping push Bitcoin further away from support and back toward the 142,000 target that remains in focus.

WRBY Warby Parker
As mentioned above, many individual stocks topped before the S&P 500 and are already well off their highs. One notable example is WRBY (Warby Parker), which has now logged 10 consecutive daily losses, falling 20% over that stretch.

Looking back to 2023, this type of 10-day losing streak has occurred six prior times. In five of those six instances, the stock bounced strongly soon afterward. The only exception was in March 2025, when the broader market was rolling over at the same time.

Considering that WRBY has now pulled back to support near 22, the risk/reward setup favors a bounce attempt here. A stop-loss near 21 — just below the June–July lows — provides a reasonable cushion.

An initial upside target around 28 aligns with the lower high from late September, with potential for higher prices beyond that if momentum reasserts.