U.S. Market Outlook | October Correction Underway and Key November Turning Point
$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $Global X Dow 30 Covered Call ETF(DJIA)$ $iShares Russell 2000 ETF(IWM)$ $Cboe Volatility Index(VIX)$
As anticipated in our previous market outlook, the U.S. stock market’s weekly trend has now passed the early-October period, with a short-term peak having formed and the market entering a correction phase.
Our existing outlook remains unchanged. The correction is expected to continue through the end of October, with the downside likely to remain limited rather than developing into a deep decline. During this period, the market is expected to fluctuate within a relatively narrow range, forming a sideways, box-like pattern as buying and selling pressure gradually stabilizes.
The most important turning point to watch is late October through early November. If the market develops as currently projected and the anticipated trend transition remains intact, this period could present a significant second-half buying opportunity.
For now, it will be important to monitor the developing correction closely and adjust positioning according to whether the outlook remains unchanged or meaningful shifts emerge in the underlying market conditions. In particular, investors should distinguish between temporary price fluctuations within the expected correction range and changes that could signal a broader shift in the weekly trend.
Several external factors will be particularly important in determining whether the market can transition back into an uptrend around the projected turning point:
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U.S.-Iran diplomatic developments: Whether negotiations progress toward a meaningful resolution of the conflict.
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The reopening of the Strait of Hormuz: Whether shipping conditions normalize and geopolitical pressure on energy markets eases.
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Oil prices and inflation: Whether oil prices decline sufficiently to ease inflationary pressure.
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Interest-rate expectations: Whether expectations for further rate hikes begin to weaken.
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U.S. Treasury yields: Whether yields stabilize and move lower, providing a more supportive environment for equities.
A favorable combination of these developments could strengthen the conditions for the next upward phase. Conversely, if geopolitical tensions intensify or oil prices and Treasury yields remain elevated, the timing or shape of the anticipated recovery could change.
The key focus remains late October to early November, when the next major weekly trend transition may emerge. Until then, a measured approach that accounts for the ongoing correction and remains responsive to changes in the outlook may be appropriate.
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