We remain broadly bullish on the S&P 500, Nasdaq 100, Dow Jones and DAX. The FTSE 100 retains a more moderate positive bias, while the Russell 2000 offers potentially greater upside if financial conditions stabilise, but also carries considerably greater sensitivity to rates and credit conditions.<\/p>\n\n\n\n
The central theme for the quarter is no longer simply whether equities can rise.<\/p>\n\n\n\n
It is whether market leadership can continue broadening beyond the handful of mega-cap technology companies that dominated earlier phases of the rally.<\/strong><\/p>\n\n\n\n Q3 was characterised by remarkably resilient equity markets despite a difficult macro backdrop.<\/p>\n\n\n\n US equities finished Q3 with solid year-to-date gains despite a weaker September. At the 30 September close, the S&P 500 was up around 11.8% year-to-date, the Nasdaq Composite 15.6%, the Dow Jones 5.9% and the Russell 2000 12.7%.<\/p>\n\n\n\n AI remained an important driver. The Nasdaq returned to record territory during September as enthusiasm surrounding AI monetisation and corporate earnings recovered following an earlier correction. <\/p>\n\n\n\n But Q3 also introduced a new complication.<\/p>\n\n\n\n US economic activity accelerated sharply into the quarter-end. September’s flash US Composite PMI rose from 56.0 to 58.4<\/strong>, its strongest reading since July 2021. Employment and demand strengthened, but cost pressures also accelerated, reinforcing the case for tighter monetary policy. <\/p>\n\n\n\n So markets enter Q4 facing a slightly different equation:<\/p>\n\n\n\n Stronger growth is supporting earnings, but stronger growth is also keeping inflation and interest rates higher.<\/strong><\/p>\n\n\n\n Corporate earnings remain an important counterweight. Rather than experiencing the normal downward drift in estimates, analysts increased the S&P 500’s Q3 bottom-up EPS estimate by 1.2% during July and August<\/strong>, while the full-year 2026 estimate increased 6.1%. <\/p>\n\n\n\n This creates our central Q4 tension:<\/p>\n\n\n\n earnings momentum versus higher discount rates.<\/strong><\/p>\n\n\n\n Of the major indices, the S&P 500 continues to offer the strongest all-round fundamental setup<\/strong>.<\/p>\n\n\n\n US economic growth remains strong, earnings expectations are rising and AI investment continues to support technology and infrastructure spending. Importantly, however, leadership appears capable of broadening into industrials, financials, energy and other cyclical areas.<\/p>\n\n\n\n BlackRock’s Q4 outlook similarly argues that strong earnings and AI investment remain supportive while the opportunity set expands beyond the original technology beneficiaries. equity-market-outlook-emea<\/p>\n\n\n\n This matters because a healthier bull market does not require technology to stop rising.<\/p>\n\n\n\n Instead, the ideal Q4 scenario would be:<\/p>\n\n\n\n AI leadership remains intact <\/p>\n\n\n\n Continued upward earnings revisions would be the most important fundamental support. Cooling energy prices or inflation would also help by reducing pressure on Treasury yields, allowing the market to benefit from strong economic growth without facing progressively tighter financial conditions.<\/p>\n\n\n\n The risk is that growth remains too strong<\/strong>.<\/p>\n\n\n\n If inflation stays elevated and Treasury yields continue rising, valuation compression could begin offsetting otherwise healthy earnings.<\/p>\n\n\n\n The weekly chart remains constructive.<\/p>\n\n\n\n Price is consolidating beneath the recent highs inside a short-term descending structure, while the 7,600 region provides an important area of support<\/a><\/strong>.<\/p>\n\n\n\n A break above the recent 7,770\u20137,800 resistance<\/a> area<\/strong> would put the psychological 8,000 level<\/strong> firmly into focus during Q4.<\/p>\n\n\n\n Interestingly, independent technical analysis from Reuters has also identified a sustained break above the August highs as potentially opening the way towards 8,000.<\/p>\n\n\n\n Q4 bias: Bullish<\/strong> The fundamental bull case for the Nasdaq remains intact.<\/p>\n\n\n\n AI infrastructure investment continues to increase and evidence of monetisation is emerging. BlackRock estimates that infrastructure investments are now achieving payback periods of less than three years for some hyperscalers, while cloud revenue growth has accelerated. <\/p>\n\n\n\n That gives the Nasdaq something much stronger than a purely speculative AI narrative:<\/p>\n\n\n\n capex \u2192 compute capacity \u2192 AI adoption \u2192 cloud revenue \u2192 earnings.<\/strong><\/p>\n\n\n\n However, expectations are now considerably higher.<\/p>\n\n\n\n That makes Q4 less forgiving.<\/p>\n\n\n\n An AI company simply reporting good growth may no longer be enough; investors increasingly need evidence that enormous capital expenditure is translating into incremental revenue and earnings.<\/p>\n\n\n\n Higher bond yields create another constraint. Nasdaq companies generally carry longer-duration earnings profiles, meaning higher discount rates can exert disproportionately large pressure on valuations.<\/p>\n\n\n\n Continued hyperscaler capex growth, upward earnings revisions and evidence of improving AI monetisation would reinforce the existing trend.<\/p>\n\n\n\n The major downside scenario would be a combination of rising yields and weakening confidence in AI returns.<\/p>\n\n\n\n The Nasdaq 100 is testing a major resistance region around 30,800\u201331,000<\/strong>.<\/p>\n\n\n\n This is an important technical decision area.<\/p>\n\n\n\n A decisive breakout would place the Fibonacci extension<\/a> levels back into play, with approximately 32,000<\/strong> representing the next major upside objective before the larger 161.8% extension above 33,000.<\/p>\n\n\n\n The chart therefore fits the fundamental story well: the index remains bullish, but it must clear an important expectations barrier first.<\/p>\n\n\n\n Q4 bias: Bullish, but higher volatility<\/strong> The Dow may be one of the more interesting beneficiaries if Q4 becomes a breadth story rather than simply an AI story<\/strong>.<\/p>\n\n\n\n Its greater exposure to industrial companies, financials, healthcare and mature corporate earnings makes it well positioned if US growth remains strong.<\/p>\n\n\n\n That appears plausible.<\/p>\n\n\n\n September’s US PMI data showed acceleration across both manufacturing and services, with US activity materially outperforming other major developed economies.<\/p>\n\n\n\n The fundamental chain is therefore straightforward:<\/p>\n\n\n\n stronger demand This does not require Nasdaq weakness.<\/p>\n\n\n\n Both can rise simultaneously, but for different reasons.<\/p>\n\n\n\n The Dow remains inside its longer-term rising channel.<\/p>\n\n\n\n The recent correction has taken the index below the channel midpoint, but the broader structure remains intact.<\/p>\n\n\n\n The initial technical objective is a recovery towards the previous highs around 54,500\u201355,000<\/strong>.<\/p>\n\n\n\n A sustained recovery could then allow price to rotate towards the upper boundary of the rising channel<\/strong> later in the quarter.<\/p>\n\n\n\n Q4 bias: Bullish<\/strong> The Russell 2000 is perhaps the most interesting index in the forecast because its bull case is also the most conditional.<\/p>\n\n\n\n Small-cap companies should benefit disproportionately if US economic growth remains robust and earnings participation continues broadening.<\/p>\n\n\n\n The problem is financing.<\/p>\n\n\n\n Smaller businesses generally have greater sensitivity to borrowing costs, refinancing conditions and domestic credit availability than the mega-cap companies dominating the S&P 500.<\/p>\n\n\n\n That leaves Russell caught between two powerful forces:<\/p>\n\n\n\n stronger growth = positive for earnings<\/strong><\/p>\n\n\n\n but<\/p>\n\n\n\n higher rates = negative for financing and valuations.<\/strong><\/p>\n\n\n\n That makes Treasury yields and credit spreads especially important for the Q4 Russell thesis.<\/p>\n\n\n\n If economic growth remains healthy while yields begin stabilising, the Russell could become one of the strongest catch-up trades in the market.<\/p>\n\n\n\n If yields continue aggressively higher, Russell is considerably more vulnerable.<\/p>\n\n\n\n The weekly chart shows Russell retreating from the upper portion of its long-term rising channel.<\/p>\n\n\n\n A further correction towards the lower channel boundary<\/strong> would not necessarily invalidate the broader bullish structure.<\/p>\n\n\n\n Instead, that area could provide the technical base for another rotation higher.<\/p>\n\n\n\n A successful hold and reversal from the lower channel would reopen a move towards the upper channel boundary<\/strong>, potentially taking the index back through the 3,000 region during Q4.<\/p>\n\n\n\n Q4 bias: Conditional bullish<\/strong> The DAX enters Q4 with one of the more interesting improving macro backdrops.<\/p>\n\n\n\n The Eurozone Composite PMI accelerated to 53.1 in September from 52.0<\/strong>, its strongest pace of growth since April 2023. Growth was broad-based and accompanied by improving order books. <\/p>\n\n\n\n Germany has been an important part of that improvement.<\/p>\n\n\n\n This matters because the DAX has substantial exposure to industrial machinery, manufacturing, electrification, chemicals and other globally cyclical businesses.<\/p>\n\n\n\n Government infrastructure and defence spending provide another source of demand.<\/p>\n\n\n\n The potential earnings chain is therefore:<\/p>\n\n\n\n fiscal investment + improving orders The risks remain meaningful.<\/p>\n\n\n\n European inflationary pressures are rising again alongside energy prices, potentially requiring further ECB tightening. German manufacturers also remain highly exposed to global demand and Chinese competition.<\/p>\n\n\n\n Nevertheless, compared with the stagnant German backdrop seen previously, the rate of change has improved materially<\/strong>.<\/p>\n\n\n\n The DAX is currently trapped between two important anchored VWAPs<\/a>.<\/p>\n\n\n\n The lower anchored VWAP continues to provide structural support, while the AVWAP drawn from the August high remains resistance.<\/p>\n\n\n\n That creates a straightforward Q4 trigger:<\/p>\n\n\n\n reclaim the upper anchored VWAP \u2192 bullish continuation confirmed.<\/strong><\/p>\n\n\n\n A successful breakout from the current descending structure would reopen the broader uptrend, with approximately 28,000<\/strong> representing our major upside objective.<\/p>\n\n\n\n Q4 bias: Bullish, conditional on the AVWAP reclaim<\/strong> The FTSE 100 requires a different interpretation because the UK economy itself remains relatively subdued.<\/p>\n\n\n\n The average UK PMI nevertheless improved from 50.5 in Q2 to 52.1 in Q3<\/strong>, indicating some acceleration, although S&P Global estimates underlying quarterly growth remains modest. Inflation pressures have simultaneously increased, particularly in services. <\/p>\n\n\n\n That leaves the Bank of England facing an uncomfortable combination of:<\/p>\n\n\n\n weak-to-moderate growth <\/p>\n\n\n\n But the FTSE 100 is not simply a UK domestic-economic trade.<\/p>\n\n\n\n Large parts of the index generate revenues internationally and it carries substantial exposure to banks, energy, mining, pharmaceuticals and multinational consumer companies.<\/p>\n\n\n\n That gives it several Q4 supports.<\/p>\n\n\n\n Commodity strength benefits parts of the mining and energy complex. Higher rates can support bank revenues provided credit deterioration remains contained, while weaker sterling can increase the sterling value of overseas earnings.<\/p>\n\n\n\n The FTSE has consequently remained resilient despite the relatively uninspiring domestic backdrop, recently trading around the 10,700\u201310,800 region. <\/p>\n\n\n\n The weekly structure resembles a bull flag<\/a><\/strong> following the strong advance earlier in the year.<\/p>\n\n\n\nQ3 2026: Resilience Despite Rising Macro Risks<\/strong><\/h2>\n\n\n\n
\n\n\n\nS&P 500: Bullish \u2013 8,000 Comes Into View<\/strong><\/h1>\n\n\n\n
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= stronger market breadth.<\/li>\n<\/ul>\n\n\n\nWhat could push the S&P higher?<\/strong><\/h3>\n\n\n\n
Technical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-3-1024x661.png\")
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<\/strong>Technical objective: 8,000<\/strong><\/p>\n\n\n\n
\n\n\n\nNasdaq 100: Bullish, but the Earnings Hurdle Is Rising<\/strong><\/h1>\n\n\n\n
What could push the Nasdaq higher?<\/strong><\/h3>\n\n\n\n
Technical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-4-1024x661.png\")
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<\/strong>Technical objective: 32,000<\/strong><\/p>\n\n\n\n
\n\n\n\nDow Jones: Broadening Could Drive Another Leg Higher<\/strong><\/h1>\n\n\n\n
\u2192 industrial activity improves
\u2192 corporate volumes rise
\u2192 operating leverage improves
\u2192 earnings broaden outside technology.<\/p>\n\n\n\nTechnical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-5-1024x661.png\")
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<\/strong>Initial technical objective: 55,000<\/strong><\/p>\n\n\n\n
\n\n\n\nRussell 2000: The Highest-Convexity Q4 Setup<\/strong><\/h1>\n\n\n\n
Technical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-6-1024x661.png\")
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<\/strong>Technical roadmap: lower-channel test \u2192 recovery towards upper-channel resistance<\/strong><\/p>\n\n\n\n
\n\n\n\nDAX: German Growth Finally Provides Fundamental Support<\/strong><\/h1>\n\n\n\n
\u2192 stronger industrial production
\u2192 utilisation improves
\u2192 operating leverage
\u2192 earnings revisions higher.<\/p>\n\n\n\nTechnical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-8-1024x661.png\")
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<\/strong>Technical objective: 28,000<\/strong><\/p>\n\n\n\n
\n\n\n\nFTSE 100: A Global Index in a Weak Domestic Economy<\/strong><\/h1>\n\n\n\n
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Technical outlook<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2026\/10\/image-7-1024x661.png\")
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