November 4, 2026
Our regime read changes today: AMBER, continue defensive posture. Yesterday we were at RED. This morning spot volatility fell back below 20, and the volatility curve moved from inverted to slightly upward sloping. That is an improvement, but it is not an all clear. The November to December step is almost flat, so the market is paying almost nothing for the relief, and one bad headline could push spot volatility back above 20 again.
Tuesday’s tape closed mixed. The S&P 500 finished at 7,563.40, up 0.29 percent, the Nasdaq Composite rose 0.62 percent to 25,319.75, and the Dow fell 0.49 percent to 51,727.46. This morning futures are solidly higher after a sharp overnight reversal: S&P 500 futures are up about 1.04 percent, Nasdaq 100 futures are up about 0.93 percent, and Dow futures are up about 1.44 percent, or 748 points. Futures had fallen hard overnight on the midterm results, with Nasdaq 100 futures down as much as 2.4 percent and S&P 500 futures down 1.4 percent, before reversing on a better than expected jobs print. That swing, from overnight fear to a morning relief rally, reads as unsettled, not settled.
Spot VIX sits at 18.27 this morning, down 2.57 points from Tuesday’s close of 20.83. The November contract sits at 18.68 and the December contract at 18.76, so the November to December step is only plus 0.08 points, or plus 0.43 percent. That is almost flat, and it sits far below the long term median step of about 6.3 percent. In plain terms, traders are no longer paying up for November volatility the way they were yesterday, but they are also not paying much for the step into December. There is only a thin cushion underneath this morning: the November contract sits 0.41 points above spot, so spot volatility is only a small move away from the November level. The January contract sits at 19.67, so the total slope from spot to January is plus 1.40 points, but almost all of that slope sits in the December to January step of 0.91 points, not in the November to December step.
Positioning gives the same caution in plain terms. One morning snapshot puts spot near 7,569 below a flip level near 7,629 and above a put wall near 7,500, a setup in which dealer hedging can amplify moves in either direction. A second session snapshot puts the put wall near 7,400, so the methods disagree on that level, but both put spot below the flip and in territory where dealer hedging amplifies moves. The expected daily move for the S&P 500 is about plus or minus 1.15 percent.
Two other pressures are worth watching. The 10 year Treasury yield sits about 4.92 to 4.93 percent this morning, down about 3 basis points and still below the 5 percent round number. Oil is lower this morning, with West Texas crude about 94.67 dollars, down about 1.5 percent, and Brent crude about 101.65 dollars, down about 1.9 percent, after a volatile week on conflicting signals about the United States and Iran. Gold is above 4,000 dollars this morning, up about 3 percent in European trading to about 4,046 dollars, and the dollar index is about 101.46, down to around a one month low, as yields eased after the election result.
Market news this morning, with no position framing, is led by the election result and earnings. Democrats won control of both chambers of Congress in the midterm elections, and the market read so far is that divided Washington limits sharp policy shifts, even though the initial overnight reaction was negative. AMD rose more than 7 percent premarket after a stronger 2027 growth outlook, Amazon rose about 3 percent, and Meta, Nvidia and Alphabet each gained more than 1 percent. SpaceX and Tesla each lagged, down more than 4 percent premarket, and Trump Media fell about 6.5 percent. Earnings today include Caterpillar, CVS, Uber and McDonald’s before the open, and Qualcomm, Arm and DoorDash after the close.
The December question will not go away. The Fed target range was held at 3.75 to 4.00 percent on October 28 on a 10 to 2 vote, with Governor Cook and Cleveland Fed President Hammack dissenting in favor of an immediate hike. The next meeting is December 8 to 9. Prediction markets put a December hike at about 77.5 percent this morning, and fed funds futures imply about 84.6 percent, which still prices a hike as the base case, not as a coin flip. For a December hike to be taken off the table, inflation needs to keep cooling, and the next tests are Friday’s payrolls report and the November 10 CPI report.
What is next: the 8:15 AM ADP print already landed, with private payrolls up 86,000 in October against 69,000 expected, and September revised down from 90,000 to 86,000. The beat is against a lowered bar, not a reacceleration, and professional and business services lost jobs for a third straight month. Still ahead today are the 9:45 AM S&P Global services PMI final, prior 57.9, and the 10:00 AM ISM services index, consensus 54.7 to 54.8 against a prior 54.9. Watch prices paid, at 74.0 in September, and employment, at 50.1 in September. The week ahead then runs through jobless claims and Fed speakers on Thursday, and the October employment report on Friday, with payrolls expected up about 65,000 after September’s 29,000 and unemployment at 4.2 percent.
What changes the read: the November to December step widening materially toward a healthy slope, with spot volatility settling and holding lower and real cushion rebuilding underneath it, would support a calmer read. A move back above 20 in spot volatility, or the November to December step inverting again, would push us back toward RED. Until the November to December step pays more for the risk ahead, we stay defensive and patient, with no hurry to chase this morning’s relief rally into Friday’s payrolls report.
Educational market analysis only. Not investment advice. See Terms of Use.
Related: Technicals: Weekly S&P 500, Still Bullish, With Building Caution
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