The Vibes Are Immaculate, History Is Not

The Vibes Are Immaculate, History Is Not August 16, 2026

TECHNICAL STRATEGY Entering Worst Spot of the Calendar With Complacency High Jonathan Krinsky, CMT WHAT YOU SHOULD KNOW: ( The equal-weight S&P 500 (SPW) is up ~16% YTD and at all-time highs, and every sector is now green on the year. The 'broadening' has happened, and the vibes are immaculate. Unfortunately, history says don't get too comfortable as we enter the worst part of the calendar during mid-term election years (8/18-10/11). It's not that the mid-terms themselves are always bearish, in fact it's often some other unknown event like the

This report is intended for Unauthorized distribution prohibited. invasion into Kuwait ('90), LTCM ('98), or Ebola ('14). The fact is that since 1990, SPW has suffered at least a -7% pullback in the August-October period every time except 2006, when it saw a -9% decline from May-July. We come into this period with the index at all- time highs, volatility at YTD lows, and still yet to see an 80% downside volume day since last October when the average year sees 21 such days. Further, despite dovish data from NFP, CPI, PPI and retail sales over the last week, long-end U.S. treasury yields went out near their highest levels of this cycle. In summary, we think this a very attractive time to pare down risk, or look at hedging broad-based equity exposure as we enter a very difficult part of the calendar, historically speaking. ■ Equal-Weight Seasonality Peaking. In mid-term election years since 1990, SPW Index has peaked on 8/18 on average before a pretty rough stretch into mid- October. While the mid-terms themselves can sometimes cause volatility, it’s often something else that we may not even be aware of. The point is, we are in a window that historically sees downside volatility, and we are entering it with the market at all-time highs and VIX at YTD lows. ■ Mid-Term Volatility. '90, '98, '02, '10, '14, '18, and '22 all saw at least a -7% pullback in the August-October period. '94 was -5% (-8% by Dec.). '06 was the only year to avoid one, but it was -9% from May-July, so in some ways it just front-ran that. ■ Minimal Drawdown. Since the March decline, the RSP hasn’t had more than a -2.25% pullback. This just adds to the idea that a hiccup is coming as we enter the seasonal soft spot. ■ Stretched Above 200 DMA. Trend clearly strong, but price now ~11% > 200 DMA. Outside of post-COVID, RSP typically doesn’t get a bigger spread to its 200 DMA than where it is now. ■ Where Are the Downside Volume Days? This year is an anomaly in that there has yet to be even one 80% NYSE downside volume day. The average year sees 21 such days, and we have never had a year with less than 5! ■ Healthcare a Potential Standout. Historically HC has held up best in the Aug-Oct. period of mid-term election years. ■ Semis Rejected at 50 DMA. SOXX failed precisely at its 50 DMA, consistent with the initial counter-trend rally following a boom/bust top. Still looking for a 200 DMA later this year. ■ Energy Breaking Out. As we have said previously, we don’t love chasing energy strength given it can seemingly be unwound by a single headline. That said, we also wouldn’t fight this multi-month breakout. ■ Yields Shrugging off Dovish Data. Despite dovish data from NFP, CPI, PPI and retail sales over the last week, long-end U.S. treasury yields went out near their highest levels of this cycle.

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Equal-Weight Seasonality Peaking

Looking at the average seasonal pattern of mid-term election years since 1990, the equal-weight S&P 500 (SPW) has peaked on August 18th before a pretty rough stretch into mid-October. While the mid-terms themselves can sometimes cause volatility, it’s often something else that we may not even be aware of. The point is, we are in a window that historically sees downside volatility, and we are entering it with the market at all-time highs and VIX at YTD lows.

Source: BTIG Analysis and Bloomberg. BTIG, LLC Jonathan Krinsky, CMT (