Halloween is almost here. And Wall Street may have its own version of trick or treat coming.

On the treat side, earnings remain strong. Seasonality is turning favorable. And we are entering what has historically been one of the strongest parts of the four-year election cycle. But there is another side. The April 2025 V-bottom is now roughly 18 months old. Market breadth has been unusually narrow. Credit has started to tighten in some AI-related areas. And there are uncomfortable similarities to both 1999/early 2000 and 4q2018.

I’ve managed equities through 35 years of bull markets, bear markets, bubbles, recessions, rate cycles and crashes. And one lesson keeps coming back: bull markets usually don’t end just because investors are worried. The greater danger is when something important actually breaks.

Today we’ll through six pieces of evidence: three treats and three potential tricks. Then we’ll decide whether 8,000 still belongs on the scoreboard, and how much confidence that target which has stood for the better part of 15 months, deserves.  For retirees, the question is bigger than an index number. Is this still a market to participate in, or one where we should start playing more defense and talk to your advisor to change allocations?

Treat 1  Earnings are still the markets best defense

Start with the most important number in this discussion. Earnings. The early Q3 reporting season still shows substantial profit growth. Goldman’s October 16 forecast calls for $375 of S&P earnings this year and $415 in 2027. Those are forecasts. Goldman puts headline growth at 36% this year, including one time gains, and 11% next year, with 2027 growth closer to 18% after adjusting for non-recurring distortions in 2026.

The Citadel Securities chart tells a similar story. Earnings have been clearing a rising bar, and analysts still expect strong growth into early 2027. Some underlying business reports remain impressive. Fastenal reported daily sales growth of 15.5%. Schneider Electric reported organic revenue growth of 16.9%, helped by data-center demand. Large-bank results also offered encouragement on lending and credit quality. So despite all the discussion about recession, rates and AI bubbles, corporate America isn’t behaving like it is falling apart.

The market doesn’t need higher valuations. It needs earnings to keep delivering. But here’s the catch: strong earnings today don’t guarantee strong stock returns tomorrow. And a favorable calendar cannot protect us if financing starts to break.

Trick 1  The 2018 warning

The last midterm election during a Trump presidency was 2018. Investors who simply bought the seasonal playbook got a nasty surprise. The S&P 500 fell almost 20% from its September closing high into Christmas Eve. The Fed kept tightening, financial conditions tightened, and investors grew more worried about growth and trade. That distinction matters. Rate increases by themselves do not automatically kill bull markets.

Our earlier Fed-cycle chart showed that since 1994, the S&P averaged a decline of about 2.7% three months after the first hike—but gains of 3.4% after six months and 8.7% after twelve months. That’s a small historical sample. It tells us the first hike isn’t an automatic sell signal. It doesn’t tell us every tightening cycle ends safely. The danger comes when tighter rates damage credit, earnings and growth.

Goldman reports that the 10-year Treasury yield rose more than 100 basis points over six months before retreating more than 20 basis points over two weeks. High-yield credit spreads widened more than 20 basis points, with particular pressure among AI-related borrowers. And monetary policy works with a lag. Bespoke’s study puts the peak GDP response around ten months after a policy shock. That’s the 2018 warning. The damage may arrive after investors have grown comfortable with higher rates. But the calendar still gives the bulls something substantial to work with.

Treat 2  Strong years have tended to finish strong

Now look at this chart.

When the S&P was already up between 10% and 20% through September, there were 21 completed comparable years in this study since 1950. The fourth quarter was positive 18 out of 21 times. That’s an 85.7% historical hit rate, with an average fourth-quarter gain of 5.3%. Our October 16 investment work made exactly this point: strong years have historically tended to close strong. But the dates matter. That’s a full-quarter return measured from the end of September. We cannot take the entire 5.3% and automatically add it to today’s index level.

Citadel’s study shows average S&P gains of roughly 2.4% in October and 2.2% in November during midterm years but most of that October return historically comes late in the month.  Combine that seasonal backdrop with strong earnings and the reopening of corporate buyback windows, and there is a meaningful tailwind. None of this means stocks have to rise. These are overlapping seasonal studies, not separate guarantees that we can add together. And while the calendar looks better, one part of the market is telling a much less comfortable story.

Trick 2  The dotcom comparison and narrow leadership

Now we get to the chart that may be the most controversial.

Semiconductors today and semiconductors around the dotcom peak have followed remarkably similar paths. Bespoke describes the pattern as eerily similar. But I don’t want to overstate this. A matching chart is an analogy, not a forecast. The earlier semiconductor advance was also much larger. During Dot.com there was a cherry on top due to the relaxed monetary conditions around Y2K at year end 1999 and 1q2000. And today’s bubble-like behavior appears more localized. Bank of America’s price-based bubble indicator shows far fewer extreme readings than during the dotcom period.

The uncomfortable similarity is breadth. Goldman says the S&P recently sat only about 2% below its record high while the median S&P stock was approximately 15% below its own high.

Bespoke found something even stranger: a new S&P high with fewer than one-third of its stocks above their 50-day averages. Related breadth warnings clustered around late 1999 and March 2000. That doesn’t mean sell everything. It means fewer horses are pulling the wagon.

And if one of those horses stumbles, the index has less support. So can the election cycle overcome that weakness?

Treat 3  The midterm cycle is turning more favorable

We are in Year Two—the midterm year. Historically, that’s often been the uncomfortable year. Markets have tended to struggle before improving later in the year. The period beginning late in the midterm year and extending into Year Three has historically been one of the stronger parts of the presidential cycle.

Citadel’s study shows Q4 in midterm years averaging roughly 5.6%, versus about 2.9% across all years. But here’s the part I don’t want you to miss. In that study, the fourth-quarter low occurred during October in 14 of 24 midterm years. So favorable seasonality can mean correction first, rally second. And remember: the third-year pattern supports interest in early 2027. It does not establish a specific first-quarter return or make 8,500 inevitable. We also shouldn’t double-count this point and ordinary seasonality. Much of the same historical market behavior is showing up in both charts. There is one last trick to weigh before we call the score.

Trick 3  The 18 month clock and peak earnings momentum

The April 4 through April 8, 2025 tariff V-bottom is now roughly 18 months old. Our cycle work considers a possible pullback around this stage, followed by another rally into early 2027. But this is a working analogy, not a proven market clock. Age alone doesn’t end a bull market. The more important issue is whether earnings momentum and financing are weakening together.

With only about 10% of companies reporting, Goldman’s early Q3 work showed 53% beating EPS estimates by its standardized measure. That’s above the long-term average of 50%, but below the 64% average over the previous four quarters. That’s not the ordinary percentage of companies beating consensus. It’s a stricter measure of the size of the beat. Revisions remain positive, but their breadth has declined.

Goldman estimates AI capital spending is contributing roughly half of S&P earnings growth, with that boost expected to fade as spending growth slows and depreciation builds. Meanwhile, Bespoke’s neocloud basket dropped 21% in one week and stood roughly 55% below its June high. CoreWeave’s bond spread briefly moved above 1,000 basis points over Treasuries—even while GPU rental prices remained strong. That’s a fascinating split. AI demand isn’t obviously breaking. AI financing is showing stress. And earnings per share can rise while free cash flow weakens. Spending cash today doesn’t hit accounting earnings all at once.

Falling free cash flow can reflect useful investment. But eventually, that investment needs to earn a return. For me, that’s the yellow light.

The verdict

Put all six pieces together. Earnings, seasonality and the midterm cycle support the market. Tightening credit, narrow leadership and slowing earnings momentum argue for caution.

My view is mildly positive, with limited conviction. S&P 8,000 before year-end remains a reasonable target if earnings hold up and financing stress stays contained. But a target is not a promise, or a reason to take more risk than your retirement plan can bear. As for 8,500 during the first half 2027: I would keep it as an upside scenario, not my central expectation. That would require better breadth, resilient earnings and calmer credit markets. The bull market isn’t clearly broken. But the margin for error is shrinking.

What this means for retirees

For retirees and near-retirees, this isn’t about predicting the exact S&P high. It’s about recognizing when the risk-reward equation changes. You don’t have to sell everything because the market looks expensive. And you don’t have to chase everything because the S&P might reach 8,000. The question is whether the fundamental pillars remain intact.

For me, there are four gauges: earnings revisions, market breadth, credit spreads and AI monetization. Positive earnings revisions and contained credit stress leave room for a recovery. Broadening downgrades alongside persistent spread widening would weaken that case.

A few troubled borrowers do not establish a systemwide credit event. But they deserve attention before stress spreads. For someone drawing retirement income, a higher index target doesn’t make a deep portfolio drawdown easier to live through.

Closing

So is fourth-quarter 2026 a trick or a treat? I see enough support to remain cautiously constructive—but not enough to declare a comfortable win for the bulls. Eight thousand is still on the table. Confidence in getting there should depend on the next earnings reports and the credit market, not the calendar alone. Credit is talking. Breadth is talking. And AI has to prove that enormous investment can become lasting cash flow. The next move may include a trick before any treat. Stay engaged, keep the targets conditional, and let the evidence and your discussions with your financial advisor, not the season, decide how much risk belongs in the plan.

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