Market Insights - Week of October 26th

# Major Indices Outlook for the Week Ahead

Welcome back to the Hobbs Trades weekly newsletter! As your go-to market analyst here at www.hobbstrades.com, I'm providing a comprehensive overview of the major indices—S&P 500, Nasdaq 100, Dow Jones, and Russell 2000—as we enter the trading week starting October 27, 2025. Last week's hotter-than-expected CPI data and mixed earnings from tech giants like Tesla and Netflix sparked volatility, capping gains for most indices, though small caps held firm. With a lighter economic calendar and earnings from Big Tech (Amazon, Microsoft) on tap, markets may hinge on corporate results and tariff rhetoric. Broader trends remain cautiously bullish, but overbought signals and trade concerns suggest rotation risks. Let's break it down.

## Recent Performance Recap

Major indices ended last week with mixed results amid inflation surprises and earnings noise. The **S&P 500** closed at 6,708.44, up 0.67% for the week but off highs, consolidating after a 0.35% Friday dip. The **Nasdaq 100** settled at 24,915.82, gaining 0.47% weekly, buoyed by selective tech strength but pressured by semi sell-offs, with YTD returns near 22.5%. The **Dow Jones** rose to 46,413.12, up 0.48% for the week, supported by financials despite tariff jitters. The **Russell 2000** outperformed at 2,468.29, up 0.64% daily and 1.30% weekly, riding rotation momentum with a 13% YTD gain.

October's choppy action follows September's 2.1% S&P gain, with seasonality risks lingering. Valuations stay elevated—S&P at 23x forward earnings, Nasdaq at 28x—but 8% projected 2025 EPS growth and Fed easing provide support. Recent X chatter blends optimism on small-cap breakouts with caution on tariffs and tech earnings, traders eyeing Nasdaq at 25,000 and Russell holds above 2,450, while noting overbought RSI levels.

## Key Price Levels for Futures

Futures hover near peaks, with earnings and trade headlines driving action. Here's what to watch for each index:

* **S&P 500 (ES Futures)**: Trading around 6,708, support near 6,700 (recent low), with cushions at 6,680–6,690 and deeper 6,650 if selling accelerates. Resistance at 6,731–6,750 (recent highs), targeting 6,770 or 6,800 on earnings beats.

* **Nasdaq 100 (NQ Futures)**: Near 24,916, support at 24,800, with 24,700–24,750 and 24,500 below. Resistance at 25,000 and 25,100 could unlock 25,300 if tech earnings shine.

* **Dow Jones (YM Futures)**: Around 46,413, support at 46,300, with 46,100–46,200 and 45,900 as zones. Resistance at 46,500 and 46,600 may lead to 46,800 on cyclical strength.

* **Russell 2000 (RTY Futures)**: At 2,468, support at 2,450, with 2,430–2,440 and 2,400 deeper. Resistance at 2,480 and 2,500 opens paths to 2,550+ on rotation flows.

Breakouts above resistances could fuel rallies on strong earnings; breaches below supports may trigger profit-taking.

## ETF Options Chain Insights

Options flow shows cautious positioning, with volume rising on October expirations (October 31, 2025) amid earnings hedges. Implied volatility holds at 11-16% ATM, with put skew reflecting tariff and valuation concerns. Key high open interest strikes:

* **SPY (S&P 500)**: Closed ~671. Calls at 675 (OI ~9,000, vol 47,000, IV ~7.2%) signal upside hopes; puts at 665 (OI ~7,500, vol 34,000, IV ~8.5%) show hedging. Slight call tilt in consolidative action.

* **QQQ (Nasdaq 100)**: Closed ~601. Calls at 605 (OI ~2,200, vol 54,000, IV ~11.2%) capture tech bets; puts at 595 (OI ~6,800, vol 41,000, IV ~13.5%) guard valuations. Put skew persists on earnings risks.

* **DIA (Dow Jones)**: Closed ~464. Calls at 470 (OI ~4,100, vol 220, IV ~10.0%) eye cyclical gains; puts at 460 (OI ~950, vol 550, IV ~11.5%) maintain balance. Calls favored post-jobs.

* **IWM (Russell 2000)**: Closed ~247. Calls at 250 (OI ~1,900, vol 5,500, IV ~15.5%) bet on breakouts; puts at 245 (OI ~3,200, vol 3,800, IV ~18.0%) highlight rate sensitivity. Elevated put IV on rotation plays.

Calls edge puts, but OTM put skew signals protection—braced for earnings-driven swings.

## Economic Events to Watch This Week

Earnings dominate, with Big Tech reports testing growth narratives, while lighter data offers context. Key highlights:

* **Monday, October 27**: No major releases; earnings from Microsoft, Amazon (post-market).

* **Tuesday, October 28**: Case-Shiller Home Prices (9:00 ET); Consumer Confidence (10:00 ET).

* **Wednesday, October 29**: ADP Employment (8:15 ET); Pending Home Sales (10:00 ET); Fed speakers.

* **Thursday, October 30**: Initial Jobless Claims (8:30 ET), consensus 230K; PCE Price Index (8:30 ET), core forecast 0.2% MoM.

* **Friday, October 31**: Employment Cost Index (8:30 ET); Chicago PMI (9:45 ET).

Global trade rhetoric persists, but U.S. earnings rule—beats could spark rallies, misses amplify dips.

## Outlook for the Week

The Fed's dovish path underpins sentiment, setting S&P 500 and Nasdaq 100 for 8-13% year-end upside if earnings align with 8% EPS forecasts. Dow eyes 7-9% gains via cyclicals, while Russell 2000, at a 26% discount, targets 2,550+ on rotations. Bullish above supports with earnings catalysts; bearish on misses or tariff flares testing lows. Options lean hedged—expect volatility around reports.