Overall market trend: Bearish phase – day 20
Yesterdays market: Money leaving the market – Normal selling pressure
TC2000 McClellan: -28
Stocks above 40PMA T2108: 21
VIX: 15
52 week highs (US common stocks): 169
Seasonality: The historical case: October is the midterm year’s best month
Since 1950, October has been the best-performing month in U.S. midterm years, averaging a 3% gain for the S&P 500 and posting positive returns 73.7% of the time. November ranks second, averaging a 2.7% gain, with positive returns 78.9% of the time. The midterm effect is large. Across all years, October has been positive nearly 60% of the time since 1950, with an average gain of 0.89%, so the midterm version roughly triples the typical October return. LPL also notes that the improvement from October onwards in midterm years has not depended on which party holds the Presidency.
The key difference from the template.
The midterm Q4 rally has historically started from a deep autumn low, which you’ve already noted. Since 1950, the S&P 500 has suffered an average peak-to-trough decline of about 18% in midterm years. In 2026, the S&P 500 fell 5% in the first quarter, rallied 15% in the second, and gained 2% in the third, and it remains less than 2% below its last record close. The early-year weakness fits the pattern. But there hasn’t been an autumn flush, so the “relief rally off the lows” mechanism has less to work with. Detrick’s comment that the historical Q4 pattern should not be viewed in isolation applies here, especially with yields at 5.3% and oil above $100.
Overall, the seasonal tailwind for October 2026 is real but should be discounted. The usual setup (a washed-out market heading into the vote) is missing. The more likely route to a large Q4 might be a further pullback in October, followed by the post-election rally, rather than a straight run higher from here.
Indices:
$SOXX Uptrend
$QQQ: Uptrend
$SPY: Uptrend
$RSP: No trend
$DIA: No trend
$IWM: No trend
$BTC: Downtrend
$SQQQ: Downtrend
$UVIX: Downtrend
$TLT: Downtrend
$USO: No trend
$GLD: Downtrend
$SLV: Downtrend
$SLX: No trend
2%+ sectors yesterday:
- None
2%- sectors yesterday:
- $XLI -2.18%
Main sectors monthly trailing:
- Leading – $XLE $XLK
- Lagging – $XLF $XLB
Sub sectors monthly trailing:
- Leading – $SMH $HACK
- Lagging – $TAN $KRE
Bitcoin: 83k ish
Themes:
Cybersecurity
Infrastructure
Cloud Computing
Semiconductors
Software
Clean energy
Crypto
THEME 1: AI Chip Equipment & Fab Capex Supercycle
| Ticker | Company Name | Sector/Industry | Market Cap | YTD Return | Key Catalyst | Analyst Consensus |
|---|---|---|---|---|---|---|
| AMAT | Applied Materials, Inc. | Semis – Wafer Fab Equipment | verify | ~+100% | +10.95% wk; Morgan Stanley raised 2027 EPS est. to $20.92 | Buy; PT verify |
| LRCX | Lam Research Corporation | Semis – Etch/Deposition | ~$420B | verify | +10.24% wk; Micron memory capex read-across; earnings late Oct | Buy; PT verify |
| KLAC | KLA Corporation | Semis – Process Control | verify | +62.6% | +10.10% wk; JPM top US equipment pick | Buy; PT verify |
| ASML | ASML Holding N.V. | Semis – Lithography | verify | verify | Q3 results mid-Oct; EUV order intake | Buy; PT verify |
| TSM | Taiwan Semiconductor Manufacturing Co. Ltd. | Semis – Foundry | verify | verify | Sept monthly sales and Q3 earnings mid-Oct | Buy; PT verify |
| MU | Micron Technology, Inc. | Semis – Memory | ~$1.2T | verify | FQ4 rev $54.2B (+379% YoY); FQ1 guide $61.5B; capex step-up | Buy; Needham PT $1,650 (Jun) |
| TER | Teradyne, Inc. | Semis – Test Equipment | verify | verify | HBM/AI accelerator test demand | verify |
| ONTO | Onto Innovation Inc. | Semis – Inspection/Metrology | verify | verify | Advanced packaging inspection | verify |
| NVMI | Nova Ltd. | Semis – Metrology | verify | verify | Memory/logic node transitions | verify |
| ENTG | Entegris, Inc. | Semis – Materials/Consumables | verify | verify | Wafer starts rising with capacity | verify |
| MKSI | MKS Inc. | Semis – Subsystems/Lasers | verify | verify | Tool-builder supply chain | verify |
| AMKR | Amkor Technology, Inc. | Semis – OSAT/Advanced Packaging | verify | verify | HBM/CoWoS-style packaging capacity | verify |
| FORM | FormFactor, Inc. | Semis – Probe Cards | verify | verify | HBM probe card demand | verify |
| ACMR | ACM Research, Inc. | Semis – Wafer Cleaning | verify | verify | Memory fab expansion | verify |
| CAMT | Camtek Ltd. | Semis – Inspection | verify | verify | HBM/advanced packaging inspection | verify |
| ETF SMH | VanEck Semiconductor ETF | ETF | ~$74B AUM | +59.07% (18 Sep) | Broad semis incl. equipment | – |
| ETF SOXX | iShares Semiconductor ETF | ETF | verify | verify | Broad semis | – |
| ETF PSI | Invesco Semiconductors ETF | ETF | verify | verify | Equal-ish weight semis | – |
| ETF XSD | SPDR S&P Semiconductor ETF | ETF | verify | verify | Equal-weight semis | – |
Theme 2: AI Optical Networking & Data-Centre Interconnect
| Ticker | Company Name | Sector/Industry | Market Cap | YTD Return | Key Catalyst | Analyst Consensus |
|---|---|---|---|---|---|---|
| LITE | Lumentum Holdings Inc. | Optical Components | ~$74B | >+100% | Bernstein Outperform; FQ1 guide $1.225–1.275B | Mixed Buy/Hold; TD Cowen PT $675 |
| COHR | Coherent Corp. | Optical Components/Lasers | ~$50B | verify | PhotonLink launch; +10% on 1 Oct | Buy; Bernstein PT $350, TD Cowen $330 |
| CIEN | Ciena Corporation | Optical Networking | ~$52B | +59% | Bernstein PT $440; Evercore upgrade, PT $550 | Buy; PT verify |
| GLW | Corning Incorporated | Fibre/Specialty Glass | verify | >+100% | +8.31% wk; Nvidia/Amazon fibre deals | Buy; PT verify |
| ANET | Arista Networks, Inc. | Data-Centre Networking | verify | verify | Bernstein Outperform initiation | Buy; TD Cowen PT $170 (Mar) |
| CSCO | Cisco Systems, Inc. | Networking Equipment | ~$440B | ~+46% (Jul) | +2.8% on 2 Oct; climbing AI networking orders | Buy; PT verify |
| AVGO | Broadcom Inc. | Semis – Networking/Custom AI | verify | verify | +3.35% on 2 Oct; AI chip funding headline | Buy; PT verify |
| MRVL | Marvell Technology, Inc. | Semis – Optical DSP/Custom AI | verify | verify | Optical DSPs; top optics ETF holding | Buy; PT verify |
| CRDO | Credo Technology Group Holding Ltd | Semis – Connectivity | verify | verify | Active electrical cables, AI scale-out | verify |
| FN | Fabrinet | Optical Manufacturing (EMS) | verify | verify | Builds transceivers for optics leaders | verify |
| AAOI | Applied Optoelectronics, Inc. | Optical Transceivers | verify | verify | Hyperscaler transceiver ramp | verify |
| ALAB | Astera Labs, Inc. | Semis – AI Connectivity | verify | verify | PCIe/CXL scale-up fabric | verify |
| CLS | Celestica Inc. | EMS – Networking Hardware | verify | verify | Hyperscaler switch builds | verify |
| MTSI | MACOM Technology Solutions Holdings, Inc. | Semis – Analog/Optical | verify | verify | 800G/1.6T optical drivers | verify |
| NOK | Nokia Oyj | Optical/Telecom Networking | verify | verify | Data-centre interconnect via Infinera | verify |
| ETF LYTE | Optical networking ETF (launched 2026) | ETF | verify | verify | Pure-play optics; +4% on 1 Oct | – |
| ETF LAZR | Optical/photonics ETF (launched 2026) | ETF | verify | verify | Pure-play optics | – |
| ETF IGN | iShares North American Tech-Multimedia Networking ETF | ETF | verify | verify | Networking equipment | – |
What type of market are we in: Choppy
Are breakouts working: Selectively
Are breakouts likely to work for the next 3 – 5 days: No
Are breakdowns likely to work for the next 3 – 5 days: No
Should I be trading: Markets & breadth pulled back yesterday on day 4 of the the bounce, still choppy market earnings season starts next week which should start to provide some good catalysts.
Todays watchlist (stocks setting up): Symbols from TC2000
$PLTR
$SOXX
$HPQ
$DRAM
$GLW
$TQQQ
$BE
$TTD
$ORCL
$PATH