Market analysis for Oct. 27th, 2025

New highs. Gap up opening

Market euphoria seems to be at an all time high. Today it's a potential deal with China but it doesn't really matter what the news it. Bad news gets tossed aside quickly and buy the dip seems to have been the trade all year long.
We had an excellent day Friday. We waited a lot for trade entries and I feel today may be more of the same. /ES futures are already up 55+ points as I type. What do you do with that other than wait for a potential retrace?  Our ATM portfolio hit a new ATH also. We are still beating the SP 500, once again this year but our goal of 30% APR is going to be a tough one. The potential's there. We just need to be perfect these last couple months of the year. 

Here's a look at our excellent day Friday. NOTE: To be more accurate on our daily ROI I've changed how I calculate the amount of capital used. Rather than adding up the total capital used in each individual trade I'll calculate the max capital used at any one time. For example, we may do four trades in a day but only two may be open simultaneously so we are "reusing" the same capital over and over. This will make the ROI on wins and losses look more accurate. 

Let's take a look at the markets to start the new week.  With the big gap up in futures its very bullish.

New highs pretty much across the board from Fridays close. 

Investors remain firmly in risk-on mode with the Greed and Fear Index sitting at 71.07—sentiment high and any dip here is more likely to be seen as an excuse to buy than a reason to sell ​

​Margin debt is soaring to levels that make some investors uneasy, flirting with the "danger zone." For now, momentum still points higher—but a reversal would be the real red flag

​Bank Reserves fall to their lowest level since early January

​Shocking stat of the day: The US government now spends ~23 cents of every Dollar of revenue on interest expense, near the highest level this century. This comes as interest expenditures exceeded $1.2 TRILLION over the last 12 months for the first time. Interest costs have DOUBLED over the last 4 years as both rates and federal debt have surged. As a result, interest expense as a % of tax revenue jumped +10 percentage points, or +70%, to 23% during this period. For perspective, the government spent ~10% of its revenue on interest on average before 2020. Interest will soon be the US government's largest expense.

​December S&P 500 E-Mini futures (ESZ25) are up +0.91%, and December Nasdaq 100 E-Mini futures (NQZ25) are up +1.28% this morning, pointing to a sharply higher open on Wall Street as signs that the U.S. and China were nearing a trade deal boosted risk appetite at the start of a busy week.
Top trade negotiators from the U.S. and China said on Sunday that they reached an initial consensus on multiple contentious issues, including tariffs, shipping fees, fentanyl, and export controls. China’s official Communist Party mouthpiece urged the world’s biggest economies to “jointly safeguard hard-won achievements” from recent trade negotiations, ahead of Thursday’s high-stakes meeting between U.S. President Donald Trump and Chinese leader Xi Jinping. “I think we have a very successful framework for the leaders to discuss on Thursday,” said U.S. Treasury Secretary Scott Bessent.
This week, market participants will also focus on earnings reports from major tech names and the Federal Reserve’s interest rate decision.
In Friday’s trading session, Wall Street’s major equity averages closed at record highs. Most members of the Magnificent Seven stocks advanced, with Alphabet (GOOGL) and Nvidia (NVDA) gaining over +2%. Also, chip stocks rallied, with Advanced Micro Devices (AMD) climbing more than +7% to lead gainers in the Nasdaq 100 and Micron Technology (MU) rising over +5%. In addition, Ford Motor (F) surged more than +12% and was the top percentage gainer on the S&P 500 after the automaker reported better-than-expected Q3 results. On the bearish side, Deckers Outdoor (DECK) plunged over -15% and was the top percentage loser on the S&P 500 after the maker of Hoka sneakers and Ugg boots issued disappointing full-year revenue guidance.
The U.S. Bureau of Labor Statistics report released on Friday showed that consumer prices rose +0.3% m/m in September, weaker than expectations of +0.4% m/m. On an annual basis, headline inflation picked up to +3.0% in September from +2.9% in August, weaker than expectations of +3.1%. Also, the core CPI, which excludes volatile food and fuel prices, rose +0.2% m/m and +3.0% y/y in September, weaker than expectations of +0.3% m/m and +3.1% y/y. In addition, the U.S. S&P Global manufacturing PMI rose to 52.2 in October, stronger than expectations of 51.9, and the S&P Global services PMI rose to 55.2, stronger than expectations of 53.5. At the same time, the University of Michigan’s U.S. October consumer sentiment index was revised lower to 53.6, weaker than expectations of 54.6.
“Much like a Sherlock Holmes’ story, inflation is the dog that didn’t bark. So many people have been expecting a sharp increase in inflation and have positioned bearishly as a result, but the market is likely to keep squeezing the shorts until they realize that the economy–and Corporate America–is more resilient than many expected,” said Chris Zaccarelli at Northlight Asset Management.
Third-quarter corporate earnings season hits full throttle, and investors await fresh reports from high-profile companies this week, including Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Apple (AAPL), Amazon.com (AMZN), Eli Lilly (LLY), AbbVie (ABBV), Mastercard (MA), Visa (V), ServiceNow (NOW), Caterpillar (CAT), UnitedHealth (UNH), Boeing (BA), Exxon Mobil (XOM), and Chevron (CVX). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.2% increase in quarterly earnings for Q3 compared to the previous year, marking the smallest rise in two years.
Market watchers will also keep a close eye on the Fed’s interest rate decision and Chair Jerome Powell’s post-policy meeting press conference. The central bank is widely expected to cut the Fed funds rate by 25 basis points to a range of 3.75% to 4.00%, particularly after last Friday’s mostly favorable September inflation data. Investors will pay close attention to the Fed’s accompanying comments for clues on how far and how fast interest rates may fall from here. U.S. money markets have almost fully priced in a follow-up rate cut in December.
In other trade news, President Trump announced a series of agreements during his Asia diplomacy tour aimed at securing access to critical minerals and expanding a market for U.S. agricultural products. He offered exemptions from his reciprocal tariffs on key exports from Thailand, Cambodia, Vietnam, and Malaysia as part of the deals.
In tariff news, Mr. Trump announced on Saturday an additional 10% tariff on Canada in response to an advertisement from Ontario that he said misrepresented remarks by former President Ronald Reagan. “Because of their serious misrepresentation of the facts, and hostile act, I am increasing the Tariff on Canada by 10% over and above what they are paying now,” Trump posted on his Truth Social platform. U.S. tariffs on Canada currently stand at 35%, with energy products at 10%, though goods that meet the terms of the U.S.-Mexico-Canada Agreement are exempt from the duties.
Meanwhile, the U.S. government shutdown has entered its 27th day, with no clear resolution in sight. If the government shutdown continues, the publication of official U.S. economic data scheduled for this week, including the advance estimate of third-quarter gross domestic product, weekly jobless claims, and the September PCE inflation report, will be delayed. This leaves investors focusing on the Conference Board’s Consumer Confidence Index, the S&P/CS HPI Composite - 20 n.s.a., and the National Association of Realtors’ pending home sales data. Allianz Research estimates that the shutdown has likely already shaved 0.45 percentage points off fourth-quarter annualized GDP growth.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.025%, up +0.70%.

​The SPX volatility setup shows a short-term cooling in implied volatility, with the Volatility Risk Premium (VRP) dipping to -1.0%, marking one of its lowest readings in months.
This indicates that implied volatility is currently undervalued, suggesting traders are pricing in less near-term risk despite recent choppy price action.
The spot price has rebounded from recent lows, while volatility metrics have compressed, often reflecting short-term complacency or positioning resets.
In the immediate term, focus may turn to whether SPX sustains momentum above the 6700 area, any renewed volatility uptick could challenge that stability.

The SPY first-expiration skew currently shows a notable put bias, sitting in the 83rd percentile over the past three months. This means traders are paying a premium for downside protection, reflecting elevated short-term hedging demand even as spot prices recover toward recent highs.
The 25D risk reversal skew has remained firmly in the upper band, signaling that the options market is positioning more defensively.
In the near term, this skew dynamic suggests that sentiment remains cautious, volatility buyers may still be active, particularly around downside strikes, while any stabilization in skew could indicate easing near-term market stress.
​

VIX is back down. This will drain a lot of premium potential out of credit trades. 

1.24% expected move for SPX this week. 

Heads up on our next couple training sessions: Today we'll finally get to our discussion on Martingale vs. Pyramiding and where DCA (dollar cost averaging) fits in. On Weds. we'll get into R and R-multiple as a way to judge the performance of your trade setups. Join us today in our live zoom feed. I'll see you there!

Let's take a look at the /ES intraday 0DTE levels: Key GEX levels for today.

The large GEX levels are at 6900 for resistance. 6539 for support with 6770 being the demarcation point. 6891, 6917, 6979 are all resistance zones with  6876, 6812, 6752 working as support.

I'll see you all shortly in the live trading room. Let's make today a great trading day!