The Monday Morning Playbook: Week of October 20, 2025

Good morning,

After the prior week’s Friday selloff, stocks took another punch last Thursday as credit concerns among regional banks bubbled up to the surface.

Regional bank weakness isn’t a new trend, and it’s one of the reasons I’ve been skeptical about the potential for sustained small-cap outperformance. There’s also a direct line from the credit concerns to the private equity “canaries” I’ve flagged over the past month.

However, there are three big reasons for optimism as we look ahead to the end of the year.

First, despite the emergence of a new bearish narrative, stocks didn’t break down further last week. The major indexes mostly printed “inside weeks,” and fewer stocks made new lows across the board.

The second reason is that even if the S&P 500 breaks its 50-DMA (support just 1.6% below current levels), history suggests this isn’t a reason to turn bearish. In fact, after the S&P 500 has traded above its 50-DMA for 100 consecutive sessions, following the eventual break, the S&P 500 has been lower three months later just 2 out of 17 times.

Finally, and perhaps the most tactical reason: