The week of 26–30 October: our forecasts were right 27 of 65 times, and 2 big U.S. events ahead.
The mood of the week
The Risk Pulse went from +13.4 at the start of the week to −14.3 at the end, moving between −40.9 and +53.1, with 5 changes of pattern. The pattern at the close of the week: flight to quality. It describes how the mood moved; it is not a forecast.
- ① Mon 16:59 The pattern turned bull trap; the Risk Pulse was at +49.6.
- ② Thu 21:58 The pattern turned flight to quality; the Risk Pulse was at +24.6.
- ③ Fri 15:58 The pattern turned stagflation; the Risk Pulse was at −40.9.
Above 0 the mood leans toward risk, below 0 it leans cautious. It describes the mood as it was; it is not a forecast of direction.
The week, day by day
| DAY | RISK PULSE AT 22:00 | PATTERN | FORECASTS RIGHT |
|---|---|---|---|
| Monday 26 | +39.8 | bull trap | 8 of 13 |
| Tuesday 27 | +41.5 | bull trap | 3 of 13 |
| Wednesday 28 | +26.3 | stagflation | 10 of 13 |
| Thursday 29 | +24.6 | flight to quality | 5 of 13 |
| Friday 30 | −37.1 | flight to quality | 1 of 13 |
The Risk Pulse as it stood at 22:00 Milan time each evening, and the pattern at that moment.
Forecast vs what happened
Our forecasts of the size of each day's move were right 27 of 65 times this week (42%). A coin would be right about half the time. The busiest market of the week was QQQ (Nasdaq 100), at 2.05× its usual day; the calmest was DIA (Dow Jones), at 0.79×.
| MARKET | FORECAST | REAL MOVE | VS USUAL | RIGHT |
|---|---|---|---|---|
| SPY S&P 500 | 0.51% | 0.76% | 1.53× | 3 of 5 |
| QQQ Nasdaq 100 | 0.59% | 1.59% | 2.05× | 2 of 5 |
| IWM U.S. small companies | 0.60% | 0.92% | 1.32× | 2 of 5 |
| DIA Dow Jones | 0.44% | 0.42% | 0.79× | 4 of 5 |
| EFA developed markets outside the U.S. | 0.54% | 0.52% | 0.87× | 1 of 5 |
| EEM emerging markets | 0.74% | 1.40% | 1.70× | 1 of 5 |
| GLD gold | 0.61% | 1.35% | 1.36× | 2 of 5 |
| TLT long U.S. Treasury bonds | 0.44% | 0.46% | 1.17× | 4 of 5 |
| XLF U.S. banks and financials | 0.59% | 0.62% | 1.07× | 0 of 5 |
| XLE U.S. energy | 0.71% | 1.03% | 1.08× | 3 of 5 |
| XLK U.S. technology | 0.63% | 2.07% | 1.87× | 1 of 5 |
| VNQ U.S. real estate | 0.61% | 0.87% | 1.64× | 3 of 5 |
| SMH semiconductors | 1.00% | 3.14% | 1.99× | 1 of 5 |
Average daily move, up or down, in percent of the price. Never which way.
The big days
| DAY | EVENT | FORECAST | S&P 500 MOVED | RATIO |
|---|---|---|---|---|
| Wednesday, 28 October | The Fed decision | 0.89% | 0.53% | 0.60× |
The week ahead
- Tuesday, 3 November · Apple earnings (after the close) The full story →
- Friday, 6 November · Jobs report · 8:30 AM ET · that kind of day: 1.15× the forecast since 2010 The full story →
The markets expected to be busiest next week, on this morning's forecasts: VNQ (U.S. real estate), up to level 5 (lively), on average 1.21× its usual day; SPY (S&P 500), up to level 5 (lively), on average 1.14× its usual day; XLF (U.S. banks and financials), up to level 5 (lively), on average 1.11× its usual day. These forecasts are rewritten every evening.
The price of fear
Options work like insurance against big moves: their price tells how big the market thinks the next month's moves will be. Over the last year, the options on Oil asked for the most extra: on average 0.64% a day more movement than really came.
| FUND | OPTIONS EXPECT NOW | MOVED, LAST 21 DAYS | USUAL GAP | EXPECTED MORE |
|---|---|---|---|---|
| S&P 500 SPY | 1.22% | 0.72% | +0.35% | 97% of days |
| Nasdaq 100 QQQ | 1.80% | 1.44% | +0.31% | 90% of days |
| Dow Jones DIA | 1.07% | 0.61% | +0.27% | 96% of days |
| Gold GLD | 1.65% | 1.32% | +0.10% | 56% of days |
| Oil USO | 3.68% | 1.77% | +0.64% | 81% of days |
All values are the size of a typical day, up or down. Measured Fri 30 Oct, 23:10 (Milan). It says how big moves were priced, never which way.
Stress Test: the water now
Of 16 broad markets, 10 are calmer than their own usual, 5 about as usual and 1 rougher. The roughest compared with its usual: BRL / USD at 1.85×; the calmest: CNY / USD at 0.21×. The furthest below its peak: BRL / USD, 71.8% below (on 9.8% of its past days it was even further below).
Our record since the start
Since the start, forecasts written the evening before and then checked: 757 right of 1495 (51%). A coin would give about 50%. Every one is on the Track Record page, wrong days included.
The Fat Lady's week
Our news desk read 650 stories about 48 companies; after 219 of them the stock had a day at least twice its usual size. One company per line below.
NOW (ServiceNow, Inc.), Thursday, 29 October: the stock's day was far more than usual.
Her reading, before any price: Truist's analysis suggests that the impact of ServiceNow's artificial intelligence on its overall growth is limited.
GOOGL (Alphabet Inc.), Thursday, 29 October: the stock's day was far more than usual.
Her reading, before any price: Alphabet missed on revenues, reigniting concerns about AI spending.
QCOM (QUALCOMM Incorporated), Friday, 30 October: the stock's day was far more than usual.
Her reading, before any price: The news concerns Wall Street's forecasts for Qualcomm's key Q4 metrics, which could significantly impact the QCOM stock.
CAT (Caterpillar, Inc.), Thursday, 29 October: the stock's day was far more than usual.
Her reading, before any price: The news might concern significant issues that affect the company's profit forecasts.
LLY (Eli Lilly and Company), Thursday, 29 October: the stock's day was far more than usual.
Her reading, before any price: A 53% increase in sales could indicate strong business growth despite prices having decreased, positively influencing profit forecasts.
The Nostromo's week
The week ended with a mix of volatility and calm. Monday and Tuesday saw a relatively nervous market with the Risk Pulse at +39.8 and +41.5, respectively, both showing bulltrap patterns. Wednesday and Thursday brought a shift towards stagflation and flight, with the Risk Pulse at +26.3 and +24.6, respectively. Friday marked a significant downturn, with the Risk Pulse at -37.1, indicating a flight pattern. Throughout the week, our calls on the size of the move were accurate 27 out of 65 times, slightly above random chance. The Fed decision on October 28 was a notable event, though the S&P 500 moved less than our call suggested.
The news desk noted several stocks that saw unusually large movements on October 29. Truist's analysis on ServiceNow suggested limited impact from AI on its growth, while Alphabet missed revenue targets, reigniting concerns about AI spending. Caterpillar saw significant price changes alongside capital management decisions, and LLY's stock surged on increased demand for its products. Mastercard also saw volatility due to an increase in international transaction volumes. Stress tests showed that most markets were calmer than usual, with the BRL/USD being the roughest at 1.85 times its usual level, and the CNY/USD the calmest at 0.21 times.
The price of fear, as measured by options, showed that the market was pricing in higher volatility than what was realized over the last 21 days. Options on the S&P 500, Nasdaq 100, Dow Jones, Gold, and Oil all indicated a higher priced typical day compared to actual movements, with options on Oil pricing the highest typical day at 3.68%, significantly above its recent realized volatility.
Written by our AI desk from the week's numbers; checked for forecasts and invented numbers; approved by the Nostromo, our AI co-editor.
How to read this
- Risk Pulse: one number for the mood of the markets, from −100 (everyone runs from risk) to +100 (everyone looks for it). Around 0 is neutral. It describes the mood now; it never says where prices will go.
- Forecast vs what happened: every evening we write down how much each market should move the next day, up or down. Here is that number next to the move that really happened, averaged over the week. A forecast counts as right when it called correctly whether the day would be busier or calmer than the market's usual day.
- Right X of Y: how many of those forecasts were right this week. Guessing at random would be right about half the time.
- Vs usual: today's expected move divided by the market's usual one: 1.00× is usual, 1.12× is 12% more than usual, 0.66× is a third less.
- The big days: the U.S. events of the week (the Fed, inflation, jobs, earnings of the giants): how much the S&P 500 really moved, against the forecast written the night before. 1.00× means as forecast.
- The week ahead: the events coming next week and, for each kind, how much that kind of day has moved the S&P 500 against the forecast since 2010. The levels are this morning's forecasts and change every day.
- The Fat Lady's week: the stories of the week that moved their stock most against the whole market, one per company, with the reason our overnight news desk gave when it first read them, before seeing any price.
- The week, day by day: the Risk Pulse as it stood at 22:00 Milan time each evening, the pattern at that moment, and how many of that day's forecasts were right.
- The price of fear: options work like insurance against big moves. "Options expect" is the move their price asks for, as the size of a typical day; "usual gap" is how much more (or less) than what really came, over the last year. It never says which way.
- Stress Test: the water now: each broad market compared with its own long-run usual roughness: below 0.8× is calmer than usual, above 1.25× rougher. "Below its peak" is how far it stands under its highest point so far.
- Our record since the start: every forecast of the size of the move written the evening before and checked after the close, since the Barometer began. A coin would be right about half the time.
- The Nostromo's week: a short account of the week written by our AI desk from the week's numbers only, checked by a program that blocks any forecast of direction and any number not in the data.
The level colours: 12345678 from very calm to extreme.
— Written by the Nostromo and the Fat Lady, our AI desk, from live data only; approved after automatic checks. Published 10:00 Milan time.