No-Advice Disclaimer: This analysis is for informational purposes only and not a recommendation to buy or sell any security.

Stock Market Outlook: October 4th = Downtrend

Author: J.Wenger ---- Published: October 04, 2026 ---- Last Updated: 2026-10-04
Disclosure: The author holds no material positions in the securities mentioned. See Editorial Policy & Disclosures for details.

The stock market outlook remains in a downtrend as we kick off Q4 and the first full week in October while the indicators take another week to try and get their story straight.

Bitcoin, Technology, and Momentum outperformed; Gold, Healthcare, and High Dividend underperformed.

TREND ANALYSIS

The S&P500 ( $SPX ) lost 0.3% last week.  The index is:

  • ~1 % above the 50-day moving average
  • ~7% above the 200-day moving average
The SPX continues to consolidate, essentially moving sideways since the start of August. This is the main reason you see the ADX moving back and forth from bullish to bearish. Once price breaks out from the current range, we should get back to a trending market.

Technical analysis chart of $SPX showing 6 months of candlesticks with 21-day, 50-day, and 200-day moving averages, volume with EMA(50), ADX(14) with +DI and -DI, and OBV with MA(62) through 2026-03-22.

Technical Analysis – $SPX – 2026-10-04

PERFORMANCE HIGHLIGHTS & COMPARISONS

Asset Classes

Bitcoin ( $IBIT ) outperformed other asset classes for a third week in a row, but the absolute gain was small.  Gold ( $GLD ) underperformed.  The U.S. dollar continues to strengthen, and Developed Market equities ( $VEA ) dropped to bearish bias.

Performance comparison of major asset class ETFs ($USO, $IBIT, $GLD, $SPY, $VEA, $EEM, $IEF, $BNDX, $PCY, $DXY) showing 1-week, 4-week, and bias-shift returns relative to the U.S. Dollar.

Asset Class Performance vs. U.S. Dollar – 2026-10-04

S&P500 Sectors

Technology ( $XLK ) was the best sector in the S&P500 again; Healthcare ( $XLV ) was the worst, and slipped to neutral bias.  Communications ( $XLC ) dropped to bearish.

Performance comparison of S&P500 sector ETFs ($XLC, $XLY, $XLP, $XLE, $XLF, $XLV, $XLI, $XLB, $XLRE, $XLK, $XLU, $SPY) showing 1-week, 4-week, and bias-shift returns.

S&P500 Sector Performance – 2026-10-04

S&P500 Investing Styles

Momentum ( $MTUM ) led investing style ETFs to the upside; High Dividend  ( $SPHD ) led to the downside again.  Large Cap Value ( $IWX ) downshifted to neutral bias.

Performance comparison of investment style ETFs ($SPHB, $SPLV, $IWO, $IJH, $IWF, $OEF, $IWN, $IJJ, $IWX, $MTUM, $QUAL, $SPHD, $POWA, $SPY) showing 1-week, 4-week, and bias-shift returns.

Style Performance vs. S&P500 – 2026-10-04

COMMENTARY

Markets

Market breadth continues to concern.  Despite the small loss on the week, almost 78% of the S&P500 stocks finished lower!  Ideally, you'll see large participation to the upside if and when the current weakness subsides.

Macroeconomic Data and Policy

The Bureau of Labor Statistics (BLS) reported just 29,000 jobs added in September, well below the expectation so more than 80,000.  Adding insult to injury, prior months were revised lower; July figures ended up at a loss of -10,000 jobs!  Equities rallied on the news, as traders priced out the October rate hike expectations.

US PCE inflation was 3.4% (y/y) in August, up from 2.7% last year (accelerating). Core inflation, which excludes food and energy, was 3.0% just above last year's 2.9%.

The final Q2 GDP figure came in at +2.7%, 0.7% higher than the prior (2nd) estimate, but well below 2025 Q2's 4.0% increase (decelerated significantly).

Geopolitics

West Asia tension remains elevated as the Hormuz blockade and back-channel diplomacy continue, although there are reports of increased shipping traffic through the Strait.

Chinese President Xi Jinping came to the United States for a summit with U.S. officials, but no new policies were enacted.

European intelligence agencies stepped up investigations into suspected sabotage networks, following several cyber and physical attacks targeting in Germany, Denmark, and Great Britian.

EYES ON THE HORIZON

News flow eases a bit next week; ISM Services, FOMC meeting minutes, and Consumer Sentiment data.

  • Monday: ISM Services PMI
  • Tuesday: --
  • Wednesday: FOMC meeting minutes
  • Thursday: Michigan Consumer Sentiment
  • Friday: --

Best to Your Week!

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Content Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis (FRED), Hedgeye, StockCharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics.
Price and Volume charts provided courtesy of stockcharts.com.

Performance Methodology: All sector performance data is sourced from ThinkorSwim and reflects price‑only returns calculated using end‑of‑week closing data. Bias classifications follow a proprietary Invest Safely, LLC model and update only when trend conditions meet predefined thresholds. All calculations are consistent across every chart on this page.

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Not a recommendation to buy or sell any security.

Looking for more information on the Stock Market Outlook Signals? You'll find it here:

In the past, I reviewed market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

For historical Elliott Wave commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro.

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Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
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The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

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