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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                October 22, 2026                           *

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*                       e-mail: fiendbear@fiendbear.com                     *

*                    web address: http://www.fiendbear.com                  *

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Fiend Commentary
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A Rally With Reservations

Wall Street continued recovering Wednesday, with the Nasdaq gaining 1.05%, the S&P 500 advancing 0.58% and the Dow adding another 360 points. The recent technology selloff appears to have settled into an orderly correction rather than developing into something more serious.

Strong earnings helped. SpaceX gained nearly 8% after reporting its first profit as a public company, while Super Micro Computer jumped almost 10% after raising expectations for its AI server business. The semiconductor index rallied 2%.

Apparently, investors aren't quite finished with artificial intelligence.

The more encouraging development was another decline in Treasury yields. The 10-year briefly traded below 5.1%, considerably better than the 5.36% reached earlier this month. The 30-year has retreated toward 5.4% after flirting with 5.75%.

The bond market finally seems to be taking a break from its relentless selloff.

Yet not everything is participating in the improvement.

The Breadth Problem Hasn't Disappeared

Wednesday's advance was respectable, with more stocks rising than falling on both exchanges. But new lows still outnumbered new highs.

The NYSE recorded 131 new highs against 221 new lows. On the Nasdaq, the comparison was considerably worse: only 53 new highs against 216 new lows.

Those figures are not consistent with the picture of exceptional market strength presented by the capitalization-weighted averages.

Still, the improvement from the worst sessions earlier this month is meaningful. The Dow has recovered its 50-day moving average, the S&P 500 is again approaching its record, and technology has stabilized.

October's feared market collapse has yet to materialize.

It is entirely possible that the selling earlier this month was simply enough to relieve some of the speculative pressure. The next several earnings reports will help determine whether the recovery can continue.

Metals Aren't Getting the Message

Gold and silver are telling a different story.

Despite the retreat in bond yields and the dollar's recent cooling, both metals came under renewed selling pressure overnight. Gold slipped toward $4,100 while silver fell back toward $56.

Bitcoin has also struggled to regain momentum, trading around $84,000.

Ordinarily, declining yields and a weaker dollar would provide some support for alternative assets. The failure to respond suggests investors are still unwinding positions after the enormous advances earlier this year.

There may also be a more fundamental shift in sentiment.

The market increasingly believes the Fed will avoid raising rates in October but still tighten in December. That expectation, combined with Treasury yields remaining above 5%, provides considerable competition for assets that produce no income.

Gold has not lost its long-term monetary arguments. Federal debt, persistent deficits and inflation remain serious concerns.

But investors can believe in those arguments and still decide to take profits after a substantial rally.

Silver is particularly vulnerable because its industrial demand may weaken if economic growth slows. Bitcoin has its own speculative cycles and has not consistently behaved like either gold or a conventional risk asset.

For now, money appears more interested in corporate earnings than monetary insurance.

Oil Refuses to Cooperate

Meanwhile, energy prices are moving in the opposite direction.

Brent crude climbed back above $110 overnight, following renewed concerns about Middle Eastern supply disruptions.

That is uncomfortable timing for the Fed.

September CPI reached 3.7%, while producer inflation accelerated to 6.3%. Much of that pressure originated with energy, and oil remaining above $100 raises the possibility that October will deliver another unpleasant inflation report.

The Fed is increasingly relying on the argument that it can afford to wait while the earlier rate increase works through the economy.

That may be reasonable if employment continues weakening and energy eventually retreats.

But if oil stays elevated, the inflation problem could remain stubbornly persistent even as economic growth slows.

Falling Treasury yields may therefore reflect something less encouraging than renewed confidence in price stability. Investors could be anticipating slower growth and weaker employment, eventually forcing the Fed to stop tightening regardless of inflation.

Those are very different reasons for bonds to rally.

December Is a Long Way Away

Markets now assign only about a 15% probability to another rate hike at next week's Fed meeting.

October appears settled.

December remains heavily favored for another quarter-point increase, with probabilities near 90%.

That is quite a forecast considering how dramatically expectations changed during September and October.

By December, policymakers will have additional employment reports, more inflation data, the results of the midterm elections and perhaps a substantially different oil market.

It is entirely possible that inflation worsens enough to require more aggressive tightening.

It is equally possible that economic weakness makes even another 25 basis points difficult to justify.

The Fed has repeatedly demonstrated that it prefers to wait until the evidence becomes overwhelming.

WUCO probably won't change that approach now.

The Market Is Comfortable—for Now

The major averages are recovering. Bond yields are retreating. The dollar has lost some momentum. Corporate earnings are supporting technology valuations.

For the moment, those developments are enough to keep investors interested in stocks.

But the lack of enthusiasm in metals and Bitcoin, the continued excess of new stock-market lows and the renewed rise in oil suggest confidence is far from universal.

One possibility is that we are witnessing a healthy rotation in which technology consolidates, neglected stocks recover and the broader market eventually catches up.

Another is that investors are simply enjoying a temporary respite before the next round of inflation and employment reports forces everyone to reconsider the outlook.

The October Fed decision is unlikely to settle anything.

Neither is another quarter-point hike in December, assuming it happens at all.

For now, Wall Street has decided there is no immediate reason to worry.

The indexes are recovering. Whether the economy is recovering with them remains a different question.

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