September 29, 2025

(THE ROTATION IS ON – SMALL CAPS ARE DRAWING ATTENTION)

September 29, 2025

Hello everyone

WEEK AHEAD CALENDAR

Monday, Sept. 29

10:00 a.m. Pending Home Sales Index (August)

10:00 a.m. Pending Home Sales (August)

10:30 a.m. Dallas Fed Index (September)

Earnings: Carnival

Tuesday, Sept. 30

9:00 a.m. FHFA Home Price Index (July)

9:00 a.m. S&P/Case Shiller comp. 20 HPI (July)

9:45 a.m. Chicago PMI (September)

10:00 a.m. Consumer Confidence (September)

10:00 a.m. JOLTS Job Openings (August)

Earnings: Lamb Weston Holdings, Paychex, Nike

Wednesday, Oct. 1

8:15 a.m. ADP Employment Survey (September)

9:45 a.m. S&P Global PMI Manufacturing final (September)

10:00 a.m. Construction Spending (August)

10:00 a.m. ISM Manufacturing (September)

Earnings: Conagra Brands

Thursday, Oct 2

8:30 a.m. Continuing Jobless Claims (09/20)

8:30 a.m. Initial Claims (09/27)

10:00 a.m. Durable Orders ex-Transportation (August)

10:00 a.m. Durable Orders (August)

10:00 a.m. Factory Orders (August)

Friday, Oct. 3

8:30 a.m. Hourly Earnings preliminary (September)

8:30 a.m. Average Workweek preliminary (September)

8:30 a.m. Manufacturing Payrolls (September)

8:30 a.m. Nonfarm Payrolls (September)

8:30 a.m. Participation Rate (September)

8:30 a.m. Private Nonfarm Payrolls (September)

8:30 a.m. Unemployment Rate (September)

9:45 a.m. S&P Global PMI Composite final (September)

10:00 a.m. ISM Services PMI (September)

MARKET UPDATE

S&P500

Top is expected to form soon. Although there is no confirmation yet of a top “pattern-wise”, the index is being surrounded by an increasingly unfavourable environment. Indicators are showing lots of negatives. Of note is sentiment, which is finally shifting to the bull side, adding to the likelihood that a top should be seen soon. Further highs should be limited. So, we could see a week or so of more upside followed by a 5% or 10% downside move in October/November. Then a rally into year-end is expected.

Resistance: 6695/10 and 6730/45

Support: 6560/75 and 6480/95

GOLD

New highs- very over-bought. The shiny metal has been on a tear of late, but it deserves a cautious stance now. We could put in a top in the very near term and see some downside, or at the very least consolidation for a few weeks/months. Although there is no confirmation yet, upside appears limited. The yellow metal must stay above 3,717 to keep the bull move in place.

Resistance: $3791 and $3808/18

Support: $3712/22 and $3490

BITCOIN

Very Bearish – Downside is still favoured below the September 1^st low at 107.3k. Bigger picture = bearish, after Bitcoin topped at 124.5k after completing the five-wave rally from the April low at 74.4k. Note too, the bearish technical indicators (MACD) also argue that the potential is for more significant downside ahead.

Resistance: 112/112.8k and 117/118k area

Support: 107.2k, 105k and 102.6k

EVENTS TO NOTE THIS WEEK

Nonfarm payrolls this Friday. If it’s a good number, rate cuts may be put on the back burner. If it’s a bad number, the media may well start speaking about a recessionary environment again.

SEPTEMBER HAS BEEN POSITIVE – will the trend continue into October?

September, usually known as a slow or tough month for the stock market, has surprised many investors with its positive move.

So, what could put a halt to the trend?

Maybe a government shutdown?

This event looks likely to hit midweek, right as investors are closing out the month and quarter. Even more significant is the fact that a shutdown could derail the release of September’s jobs report.

The government shutdown on October 1 could not only impact the jobs numbers, but also the CPI releases, which are due out on October 15.

Presently, funding for federal government operations runs only through September 30. After that time, many operations and services would be halted.

A SMALL CAP SUPER CYCLE MAY BE IN THE VERY EARLY STAGES

Over the past four to six weeks, small caps have massively outperformed large caps.

Money has been moving out of the big, safe names and pouring into the smaller, higher-growth end of the market.

A rotation has begun.

According to Australian analyst David Bird, dozens of small companies in the ASX are breaking out of multi-year accumulation zones. Some of these companies have been building bases for a decade or more.

Bird notes the differences between Australia and the U.S.

Unlike in the US, where smaller companies are dominated by technology and start-ups, Australia’s small-cap universe is heavily resource-driven.

That means miners, explorers, and companies tied to commodities like gold, oil, and base metals.

Charts across multiple resources are breaking higher, flashing the start of what many analysts are calling a new commodity Supercycle.

For small caps, this is a powerful tailwind.

When commodity prices rise, Bird argues that their profits can multiply rapidly and so can their share prices.

It’s time to start watching this underappreciated area.

Consider this: the XSO is still 11 per cent below its pre-GFC peak in 2007.

That’s nearly 20 years of underperformance.

Now momentum is shifting, and money is rotating back into small caps.

The XSO is starting from a position of deep undervaluation.

Small caps still have not surpassed the pre-GFC peak.

Australia isn’t the only resource-heavy nation seeing this.

In Canada, Bird points out that small caps have just broken out of a 25-year consolidation.

Like Australia, Canada’s small-cap sector is dominated by miners and commodity producers. The fact that their market has finally burst higher is a powerful confirmation that this is not just a local story, it’s a global theme.

On the monthly chart, the ASX Small Ordinaries (XSO) has formed a rare double bottom against the ASX 200 (XJO) with bullish divergence. Adding to this, the RSI has just reached deeply oversold levels on the quarterly chart and crossed back to bullish.

We could be at the start of a multi-year stretch where small caps outperform.

From 2000 to 2008, during the last major commodity boom, small caps outperformed. Some investors, who were well-positioned, saw returns of 20, 50 and even 100 times.

But what about crashes that could happen?

The Australian market performs a little differently from the US. When the US tech bubble burst in 2000, the NASDAQ fell 80 per cent.

By way of contrast, the ASX 200 fell just 22 per cent, while the XSO dropped 30 per cent.

There are always corrections happening in the market. As Warren Buffett says, you shouldn’t be in the market if you cannot cope with market corrections.

Small caps are back. The rotation is on. It’s a move that could reshape wealth for those who are ready.

HISTORY CORNER

On September 29