SPY Short-Term Forecast and Trading Outlook for Tuesday, Oct 28, 2025

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.