With so few historical days matching up to our current condition, figured I would post the actual days that matched. That way you can take a look at those days yourself. Below you will find the graphics for holding 2, 3, and 5 days forward from today's algo matched days. Sooon we will be back to normal. One more trading day left in October!!

Again, I have no historical match for the current SPY setup. I do have some insights and you can look forward to those in a weekend update.

I don't have any historical matches!! Have fun tomorrow!!

Tonight’s Forecast Breakdown
The forecast this evening shows all three of our forecast windows dipping into the underperformance range, the red zone. This is a good opportunity to talk through what’s happening behind the scenes.
Let’s use the 3 Day Rating as an example. It’s currently showing a reading of -4.0, which tells us this window is performing roughly four times worse than a typical 3 day window in a market like the one we’re in now, one with moderate volatility and strong underlying returns.
So, is that the final word? Not quite. There are a few things worth considering.
First, we’re stretched on the daily bars. That’s normal in strong markets; they can stay overbought and keep grinding higher much longer than most bears expect.
Second, the historical matches the algo found for this setup form a small sample size, which means the result carries less statistical weight than we’d like. Sometimes, the specific conditions the model is matching against just don’t happen often.
Tonight, for example, the algo only found 15 matching days in the SPY’s history. That’s fairly light, and we should interpret it cautiously. Still, the pattern is clear: this is a strong leg up with multiple indicators pinned in the overbought zone. We also have a Fed decision on Wednesday and things may be a bit quiet as we head up to that. Here we can see those matching days:

Looking closer at the matches, there’s a heavy late 1990s flavor, with a few echoes from 2017 and 2021, both strong momentum periods. Of those 15 samples:

• 4 instances saw a loss greater than 2% over the next three days
• Only 1 instance saw a gain greater than 2%

Overall, there were 7 winning periods and 8 losing ones, which is slightly weaker than the average 3-day window.
The average gain was +1.04%, while the average loss was -1.57%, another skew toward underperformance that we don’t often see in typical 3-day SPY behavior.

What It Means
Hopefully this gives you a better sense of what the gauges are projecting and what’s happening behind the curtain.
A quick reminder: bearish gauges don’t mean “go short.”
As someone who has built systems on hundreds of millions of data bars across indices and individual equities, I can tell you that shorting in on daily timeframes is usually a losing game.
When the market’s extended, the goal isn’t to fight it, it’s to scale back exposure, raise some cash, and be ready to step in when we finally see some weakness.
And conversely, when you start seeing strong green readings, that’s when your antennae should go up; those are often the moments when attractive setups start to emerge. As time goes  on we'll continue to have these sorts on conversations and hopefully you will be a better trader for it.

Starting with this evenings update, I’m updating the forecast format. Previously, I included projections for 1, 2, 3, 5, and 10 days ahead. From now on, I’ll focus only on the 2, 3, and 5 day forecasts.
Why Drop the 1 Day Forecast? The 1 day forecast was causing confusion for a few reasons:

• It was based on the next day’s open, but morning gaps often distorted expectations. Sometimes the market moves ahead of the signal.
• A bearish 1 day forecast made some readers overly pessimistic. Even with a 53 percent historical win rate, a couple of bad matches can skew perception.

In short, the 1 day signal was too noisy and easy to misinterpret. It’s better treated as a coin toss than a reliable edge.
Why Focus on 2 to 5 Days? These timeframes are more useful for short term swing traders. They’re less sensitive to intraday noise and better reflect how the algorithm compares current conditions to similar historical regimes.
A slightly negative forecast doesn’t mean the market will drop. It just means the expected return is below average. Most regimes are biased to the upside, so context matters.
Why Remove the 10 Day Forecast? The 10 day signal tends to reflect broader market conditions and doesn’t respond much to daily changes (typically extremes in bearish or bullish markets). It’s interesting, but not very actionable for short term decisions.
What to Expect Going Forward

• Nightly updates will include only the 2, 3, and 5 day forecasts.
• If I spot something notable in the 1 day or 10 day runs, I’ll mention it in the evening blog update.
• Since this signal publication is still new and the audience is small, I trust most readers can adapt easily.

You can always check the latest signals on the signals page.

The SPY Forecast gauges for October 22, 2025, indicate a tough outlook for the market in the coming days, with returns measured against normal levels for similar regimes. The 1 day return at -4.25 falls well below the typical positive average, suggesting a negative return for the day. The 2 day (-4.00) and 3 day (-2.63) forecasts show ongoing underperformance, while the 5 day return at -2.37 reflects a result 2.3 times worse than the norm, hinting at a sustained weaker trend. What must be kept in mind is that the algo is trying to match similar days and regimes. A negative reading is the net average of all the matching days (typically both positive and negative), 
The 10 day return at 0.02 offers a near-neutral perspective, suggesting a potential stabilization after the initial negative lean, though it remains below the positive average. Given the dramatic shifts these forecasts can undergo, tomorrow’s returns could differ significantly based on new developments. With no major updates today and uncertainty around upcoming data, the forecast points to a market leaning toward negative returns starting tomorrow, driven by weakening internals.

Stay sharp, stay informed

Dave

Just the forecast gauges for tonight.

The forecast posted yesterday was spot on. Bearish sentiment has been hanging over this market since the big red bar in the market on October 10th. Trading inside that bar just didn't look bullish. But, the undercurrents of the forecast algo nailed it again. Look for a video soon on how to use the gauge and some of the components that make it up. 

After today's rally the readings have moderated a bit, but generally bullish. I also noted the 10 day window rolled negative. We will have to keep an eye on that as the next few days unfold.

The forecast remains tilted to the bullish side across all swing timeframes. With the VIX holding above 20, expect bigger price swings. Don’t let the volatility shake you out, simply size your positions down to keep those moves within your comfort zone.