In midterm years, October is where the low usually gets put in.
I went back through every midterm year since 1986. Here's when the S&P 500 made its 4th quarter low and what it did through December 31st.
1986: low Oct 1. Q4 finished +4.7%
1990: low Oct 11. Q4 finished +7.9%
1994: low Dec 8. Q4 finished -0.7%
1998: low Oct 8. Q4 finished +20.9%
2002: low Oct 9. Q4 finished +7.9%
2006: low Oct 2. Q4 finished +6.2%
2010: low Oct 4. Q4 finished +10.2%
2014: low Oct 15. Q4 finished +4.4%
2018: low Dec 24. Q4 finished -14.0%
2022: low Oct 12. Q4 finished +7.1%
8 out of 10 times, the low came in October, and the market rallied into year end. Average Q4: +5.5%.
Go back to 1950 and it's the same story. 19 midterms, 14 October lows.
Now here's the part that matters for this year.
The 2 times the low DIDN'T come in October, 1994 and 2018, the market kept bleeding into December. Both finished Q4 red. 2018 dropped 14% and didn't bottom until Christmas Eve.
So where's 2026?
The S&P 500 closed September at 7,651. It's sitting at 7,551 right now, down 1.3% for the quarter. And the lowest close of Q4 so far? Yesterday. There's been no October low. No bounce.
This year is following the exceptions, not the rule. And my monthly signal just flipped bearish.
History says the midterm low usually comes in October and it's off to the races. But when it doesn't, the drop tends to come later, into December. Right now 2026 is acting a lot more like 1994 and 2018 than the rest.
I'm not saying it has to happen. I'm saying I'm watching it closely, and I'm not going to ignore it just because "Q4 is usually bullish."
Even in 1994 and 2018, once the low finally came, it rallied into the end of the year. So the question isn't IF the low comes. It's WHERE.
Nothing changes about my probabilities and what I'm expecting. I still think we'll see 779 by December 2nd, but we could easily sell off after that for the rest of the year. We'll keep taking it level by level. Just know, 8 out of 10 times the low came in October and the market rallied into year end. A couple of times it kept going lower first. I'm watching that closely.
The biggest thing is: respect the range, respect the TTM squeeze. We've been in the same range for 92 days now, and the TTM squeeze on the daily and weekly has been squeezing for 92 days.
And for the love of goodness' sake, respect the 2 hour imbalances. They've been some of the most reliable magnets on the chart over the last 2 years, and price keeps going back to fill the ones sitting close by.
So the plan stays the same. We lose 750, hop out, de risk, and reposition down in the 740s. Either way, I see 779 by December 2nd.
— Obnoxious Bull Jonesy
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