Stock Market Outlook for October 2, 2025
The degradation in the labor market presents concern pertaining to Consumer Discretionary exposure in portfolios through the end of the year.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Deere & Co. (NYSE:DE) Seasonal Chart
Mercury Systems Inc. (NASD:MRCY) Seasonal Chart
CASI Pharmaceuticals, Inc. (NASD:CASI) Seasonal Chart
iShares MSCI USA Value Factor ETF (AMEX:VLUE) Seasonal Chart
The Markets
Stocks shook off concerns pertaining to the US government shutdown and bid stocks higher on Wednesday in the first day of the new month and quarter. The S&P 500 Index closed up by a third of one percent, holding above support around the 20-day moving average (~6605), the variable hurdle that has kept the short-term trend off of the April lows intact. The weakest, most volatile, period for the equity market through the back half of September has come to an end, but evidence of a bottoming setup on the volatility index hints that we may not be in the clear toward broad risk exposure, yet. The average (seasonal) peak for the so-call “fear gauge” is the end of October. Despite the transition out of the weakest two-week stretch of the year for stocks, the strategy remains the same, which is to avoid being aggressive in risk (stocks) for now (over the next couple of weeks), but take advantage of any volatility shocks (should they materialize) to increase the risk profile of portfolios ahead of the best six months of the year for stocks that gets underway at the end of October. We have picked our spots in the market to which we want to be exposed, both through and beyond the period of seasonal volatility, in our list of candidates in the market that are worthy to Accumulate or Avoid and the performance continues to be exceptional. Those themes that are enduring according to our three-pronged approach incorporating seasonal, technical, and fundamental analysis keeps us focused and we are not concerned, at all, that the broad market weakness that is normal of September failed to materialize. We will continue to allow for the possibility of volatility to materialize in the month ahead and position the risk metrics of portfolios appropriately until a more ideal setup to reach out on the risk spectrum (eg. away from bonds/gold and towards our four desired sectors to be exposed) is revealed. The Seasonal Advantage Portfolio that we oversee at Castlemoore continues to chart all-time highs and has been realizing some of the best performance that it has seen in years.
Today, in our Market Outlook to subscribers, we discuss the following:
- Health Care sector
- US Job Openings and Labor Turnover Survey (JOLTs) and the investment implications within
- Degradation in the labor market bodes well for bond prices
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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.77.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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