October has continued to live up to its reputation for turbulence. Last week, major banks kicked off Mega-cap earnings season—JPMorgan, Wells Fargo, Citigroup, Goldman Sachs, and Bank of America all posted strong double beats in both revenue and earnings. Yet, despite solid numbers, the market’s focus quickly shifted to forward guidance. JPM, Citi, and Bank of America all highlighted concerns over credit quality—enough to spook investors and temper enthusiasm.
Still, the broader market found its footing, recovering slightly and finishing just a few pennies above the prior week’s “meltdown” close. Key economic data releases—CPI and PPI—were delayed due to the ongoing government shutdown and are now expected on October 24th. In the meantime, volatility remained elevated, largely fueled by persistent trade tensions and general uncertainty. CNN’s Fear and Greed Index slipped into “extreme fear” territory by Friday, while the AAII Investor Sentiment Survey echoed this caution. Bearish sentiment jumped to one of the highest levels of the year at 46.1%, suggesting investors are bracing for downside over the next six months.
But as any trader knows, calling market tops is a hard way to make a living. Rather than react to headlines or short-term sentiment, it’s often more productive to step back and focus on what truly matters: price action. Price remains the market’s most honest indicator—and it often reveals whether fear is justified or overblown.
Taking Stock: Sector Strength Amid the Fear
It’s difficult to reconcile extreme bearish sentiment with the fact that the S&P 500 closed less than 1.5% off all-time highs last week. Let’s break down where the strength—and the opportunity—really lies.
Technology (+2.38%), Consumer Discretionary (+2.48%), and Communication Services (+1.90%) all outperformed the S&P’s +1.74% gain. If markets were truly turning defensive, would the most growth-oriented, “risk-on” sectors be leading? Probably not.
We also saw solid performance in typically defensive sectors like Consumer Staples (+2.09%) and Real Estate (+3.34%), which led the week. However, that likely reflects temporary “flight to safety” behavior—investors retreating to dividend payers for comfort—rather than a lasting rotation out of growth.
The most important technical development came from semiconductors, which closed at all-time highs both on an absolute basis and relative to the S&P 500. That kind of leadership from such a cyclical, economically sensitive group is hard to dismiss. It suggests risk appetite remains alive and well beneath the surface.
Tactical Takeaways: Using Volatility as Opportunity
I’ve said it before: volatility, while uncomfortable, is the price of admission for opportunity. Markets are designed to shake out the weak hands—those reacting to headlines rather than data. The key for tactical investors is to use these “fear resets” to our advantage.
When sentiment skews heavily bearish but leadership remains intact, the setup often favors contrarian positioning. It doesn’t mean ignoring risk, but rather using it selectively—“buying fear” where price confirms strength. Periods like this can offer attractive entry points into quality names that have been unfairly discounted by reactive selling.
In other words, the market’s emotional swings create the tactical landscape. The challenge—and the opportunity—is to stay disciplined, data-driven, and focused on the evidence. As we head into the rest of earnings season, the market’s message isn’t one of collapse; it’s one of recalibration.
So, while the headlines scream volatility, the charts tell a different story: one of resilience, sector rotation, and selective opportunity. Our job is to listen to the latter—not the noise.
If you’re curious how my tactical trading and portfolio structuring strategies could enhance your investment approach, I invite you to schedule a complimentary consultationhere. We’ll discuss how these systems can be tailored to your financial objectives.
The views stated in this letter are not necessarily the opinion of Cetera Wealth Services, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.