Broad Market Price Analysis

On October 13th, 2022, the S&P 500 bottomed, after selling off approximately 25% in just under 8 months. Since this low, the market is up around 95% in a new bull market, as investors continue to wonder how much further this new bull cycle can go. Using technical analysis, we can analyze the pattern in play for the current uptrend. Furthermore, we can fit this pattern within the larger pattern in play so that we can get a favorable perspective on how to better manage risk.

As discussed in my upcoming free analysis, the most likely pattern the bull cycle is taking off the 2022 low is what’s called a diagonal. A diagonal is a 5-wave pattern where each of the sub-waves is a series of 3-wave patterns. The primary characteristic of this pattern is that the explosive 3rd wave fails to take off, and the 4th wave tends to be very deep, retracing close to, or into 1st wave territory.

This is a very distinct and common pattern that we see in capital markets. What is unique about the current diagonal pattern is its size. It is rare to see a multi-year diagonal pattern in play, which is exactly what the market is tracing in real-time.

As you can see above, the S&P 500 is clearly in the final stages of a multi-year diagonal pattern. Note the overlapping swings in both directions, as well as the very deep 4th wave drop in March of 2025. This puts us squarely in the 5th wave of this pattern. Based on the current price action, the below counts best project where this diagonal can go:

Green Count – This is the primary scenario I am tracking. The move off the April low of this year is the A wave within the final 5th wave. We should see some type of B wave correction in the coming weeks to months, followed by a final, multi-month blow off swing into 2026. This will complete the diagonal pattern, setting the market up for a period of volatility.
Blue Count – We are in the final swings of the 5th wave. As long as 6345 and then 6205 holds on any further weakness, we should see a continued push higher into Q4 with target between 6820 – 7280.

The green count is further supported by the NASDAQ-100. It too appears to be tracing a diagonal pattern.

While we do have a full 5 waves in place, which is enough to complete the pattern in full, note the symmetry of this final 5th wave compared to the 1st wave. In order to fill out the pattern completely, the NASDAQ-100 suggests a correction and continuation into 2026

What Happens When a Diagonal Ends?

Another key element of diagonal patterns is their placement within a trend. They can only show up in two places: (1) a leading diagonal is the 1st move higher within a larger trend that is starting. In other words, it is wave 1 in a newly developing 5 wave-pattern; (2) an ending diagonal is the final move within a completing 5 wave pattern. In other words, it is wave 5 within a larger 5 wave pattern that is close to completion.

This begs the question on if the current bull cycle we are in is the start of a much larger 5 wave pattern, or the end move within a larger 5 wave pattern? If we zoom out on the larger pattern in play, it appears to be an ending diagonal within the secular bull market that started in 2009.

The above monthly chart of the S&P 500 shows a very clear and distinct secular bull market that took the shape of a 5-wave uptrend. Note how the bull market in 2017 was marked with peak momentum, followed by the vertical move after the COVID low. We have continued to see the market make new highs on weaker momentum, which is characteristic of 5th waves.

Most importantly, though the bear market in 2022 was difficult, as you can see on the chart above, it was merely a bump in the road of the larger bull trend. In short, it was not deep enough, nor long enough to constitute a reasonable consolidation of the secular bull market that started in 2009.

This leads me to believe that the diagonal pattern we are in is an ending diagonal, which once completes, will lead to a period of volatility and consolidation that most investors have not experienced.

What this suggests is that after the secular bull market completes, we will enter a very normal period of consolidation, known as a secular bear market. Though this may seem impossible, as we have been trained since 2010 to stay long and buy every dip, it is very normal part of investing. Since 1900, the market has spent 56% of the time in a consolidation period.

Furthermore, the average secular bull market since 1900 has lasted for 11.3 years and returns 774%. The current secular bull market has lasted for 16.6 years and returned just over 918%, well over the average, and the 2nd most profitable secular bull market in the last 125 years.

If we do enter a period of extended volatility and choppy markets, this does not mean that investors should avoid the stock market. What it does mean is that the easy period of mindless buy and hold and buy ever dip will not be the winning strategy going forward. Instead, and active approaching that favors focused stock picking will likely be the strategy that profits.

This becomes evident when we analyze the last secular bear market from 2000 – 2009. The S&P 500 topped in dot.com bubble in March of 2000. It traded sideways until April of 2013, at which point it reclaimed the March 2000 high and never looked back. For 13 years, the market went nowhere and gave investors 2 greater than 50% drawdowns.

The poster child of the dot.com bust is Cisco (CSCO). This is a story everyone is familiar with, which is incessantly used as a dire warning about chasing bubbles – CSCO was the leader of the dot.com bull run, returning nearly 700% from the 1998 low to the 200 tops. It then fell 90% and took more than 22 years to reclaim its 2000 top.

However, no one talks about Apple during the same time, another beneficiary to the dot.com run, returning nearly 1100% from during the same period, and then dropping 83%. Interestingly, after putting in a low April of 2003, in less than 2 years, Apple reclaimed its March 2000 top in January of 2005.

Even more interesting, from January of 2005 to April of 2013, the moment when the S&P 500 reclaimed its March 2000 top, Apple was up over 1000%.

The vital lesson Apple teaches us about normal and extended periods of volatility that occur in the markets is that not all stocks participate. The difference between Apple and Cisco is simple. Apple was one of the primary beneficiaries of the personal computer microtrend and then became the primary beneficiary of the most powerful microtrend in our lifetime – the smart phone. We went from no one having a smart phone in 2007 to nearly everyone in the world having a smart phone today.

Technology and innovation do not pause because the stock market is in a secular bear market. These microtrends are multi-decade periods that push forward regardless of the stocks market, minting new leaders along the way.

If we do see a period of heightened volatility, if the broad market does enter a multi-year consolidation period, like Apple in 2000, the AI microtrend will push forward. This will likely create similar winners, which we would view as cyclical drawdowns within secular uptrends.

This is not only anecdotal, but can be seen in various AI charts, like Nvidia, for example. While the most likely interpretation of the S&P 500, shown above, is that we do enter a secular bear market in the coming years, Nvidia, which is the primary beneficiary of the AI microtrend, appears to be in a secular uptrend for many years to come.  Like Apple from 2007 through 2018, any major drop in price due to macro events will likely be a cyclical drawdown within a secular uptrend. 

I/O Fund Portfolio

Starting in September, we began the process of raising cash while also rotating further into the AI energy theme – a theme that we first authored as far back as 2024. During this time we were able to log some meaningful gains:

Closed TSM for a 41% gain.
Closed DELL for a 35% gain.
Closed CORZ for a 194% gain
Trimmed AMD for a 34% gain.
Trimmed INOD for a +80% gain.
Trimmed APP for a +60% gain.
Trimmed ALAB for a 335% gain.
Trimmed BE for a +320% gain.
Closed OKLO for a 54% gain.
Trimmed APLD for a 89% gain.
Trimmed WULF for a 23% gain.

We were fortunate enough to take gains in APP at $626, just before selling off 27% from its high. We did the same in ALAB clocking gains as high as $232 before it saw a 43% drop from its highs. These moves put us back into a sizable cash position, which we have been deploying on nearly a daily basis since the volatility began just a few weeks ago.

Furthermore, we decided to close the above positions because they no longer fit our investing criteria or hit a stop – e.g., DELL’s thin margins, TSM’s obvious 5th wave push, and OKLO breaking below our stop. Instead, we have shifted to positions that we believe should do better in the current environment. This should not be confused with the I/O Fund asserting if a stock will continue to go up or not, rather we are asserting that other stocks fit our criteria better at this time. This is about probabilities, not about finalities.

For a more detailed look into the themes that we are investing in today, please read Beth’s most recent Top 15 AI Stocks Q4 2025 Report.

The below pie chart is our current portfolio, We are still holding about 1/3 of the cash position we built up and will continue to target the names within the trends we identified in Beth’s Top 15 AI Stocks Q4 2025 Report. As long as critical supports hold within the broad market, expect more buys over the coming weeks.

Hedge Update

As many are aware, we are pivoting our current hedge strategy into more of a trend following system. Unlike many trend following systems, our goal is to actively manage how we layer into and out of our hedge based on critical levels breaking within a trend. As of now, the critical levels are 6345 SPX and 6205 SPX. These levels could move higher if we continue to trend higher; however, until these levels are broken, we will remain unhedged and long this market.

Furthermore, we ran an updated correlation screen recently against our portfolio through 2025. Our goal is finding an ETF or combination of ETFs that will closely mimic the beta of our portfolio, which we can use to short against our portfolio so that we can approach being market neutral during times of volatility. As of this week, the closest match to our portfolio is no longer a mix between QLD+USD; it is the VanEck Semiconductor ETF (SMH).

This is visible in the chart above. We are looking for an ETF that tracks as close to the 1 line as possible, which is SMH. So, moving forward, our new hedge will be for every $1 invested, we will short $0.9 of SMH.

Stock Setups

Astera Labs (ALAB)

Blue – We are tracing a very large diagonal pattern that started on the 2024 low. The first signal that this count is in play will be a sustained break below $161. The 2nd signal will be any bounce that follows testing this level will be a clear 3-wave pattern. We would make a lower high, and then push toward $132 – $103, which would complete the 4th wave in this on-going, and large diagonal pattern.
Green – We are in a standard 5 wave pattern, not a diagonal. The $161 level should hold, and the next bounce will be a more direct 5-wave pattern that makes a fresh all time high. We will then press toward the $460 region, which will complete the 3rd wave in this very large 5 wave pattern.

Nvidia (NVDA)

Blue – We are completing wave 3 and should see a in the 4th wave consolidation. We should see another leg lower that potentially tests the $155 region but holds. This will set the stage for the final 5th wave toward $214 – $262, and will complete the uptrend pattern off the April low.
Red – We are in an ending diagonal pattern. The current drop is the 4th wave in this pattern. We will hold $173, then turn higher toward $200 in the coming weeks. The key for this pattern will be making a new high directly on weakening momentum and volume. Whether this will be the end of the uptrend pattern off the April low, or a 4th wave correction is yet to be determined and will likely come down to their earnings report.
Green – I’m adding this count to the mix due to the unique situation NVDA currently is in. This has predominantly been a fundamental story, which has consistently provided us with shallow 2nd waves and extended 3rd waves. This count is a continuation of this theme and suggests that NVDA has a very shallow 2nd wave and is currently completing wave 2 of 3. This will lead to another vertical gap on heavy volume as the trend pushes well above the $243 blue target. From a technical perspective, what must hold for this count to be valid is: 1) We must hold $164; 2) There must be a large surprise that forces a buyer’s gap in price. If their earnings report fails to provide this gap, this count gets invalidated.

Credo (CRDO)

Green – I am not very confident in CRDO’s chart. It is an overlapping mess from the 2023 low, which implies a diagonal. However, the diagonal could be interpreted in several ways.
That being said, this count suggests that we are approaching the end of the 3rd wave, which could have already topped at the recent high or could push as high as $285. Once completed, the 4th wave should be rather deep, considering the pattern best fits a diagonal.
Blue – This count suggests the full diagonal has already completed. This would complete a very large 1st wave and set us up for a multi-month 2nd wave retrace. Though this count would be challenging over an intermediate time frame, it would be setting us up for a large 3rd wave.

CoreWeave (CRWV)

Green – There is not a lot of price data with CRWV. However, the price information we have is intriguing. For one, off the IPO low, we have an aggressive uptrend that resembles a 5-wave pattern. We then have a 3-wave retrace from the all-time-high. This implies that we have a very large 1st and now 2nd wave in place. If this is playing out, any further weakness needs to hold $99.75 and then break above $188.
Red – This count would become the most probable if CRWV breaks below $99.75. This would imply that we are in the C wave of an extended 2nd wave. The drop should be a 5-wave pattern and target between $78 – $64. For any of the long-term bullish counts to play out, we must hold $50.50 at all cost.

Bloom Energy (BE)

Blue – Thirds waves are characterized with relentless price action and small dips as we progress. This perfectly characterizes BE since the April lows, as it has quickly become a 6 bagger from our March – April entries. The trend has been so aggressive that it makes it difficult to decipher where this trend might meaningfully pause. What we do know is that volume and momentum are both fading the higher we go. This is typically a sign that buyers are drying up, which precedes some type of reversal.
As long as BE holds below its recent high of $125.75, I’m expecting a 4th wave decline to take us back into the $92 – $75 range. If we do see a continuation of this drop, we need to hold $$68.50. We should then continue higher toward $165 – $200. IF we do drop below $68.50, we could be in a much larger B wave decline, which would set up another great buying opportunity.
Green – This count has us in a very large 3rd wave. This count should break over $125.75 directly, and push toward our $165 – $200 price range. We would then get a 4th wave consolidation into Q1, which would set up the final 5th wave into 2026.

Bitcoin (BTCUSD)

Green – We are in the final 5th wave of the large bull cycle that started on the 2022 lows. Note how price keeps making new highs on decelerating volume and momentum. This fact, coupled with a very filled out 5-wave pattern, has us taking gains and tightly managing risk. The path to $200,000 in a final blow off move will require the $103,604 level to first hold. At most, I can give this count a move to $83,775. If these levels hold, and we then breakout over $133,000 with force, this count will be confirmed.
Blue – We will see one final push to $133,000 into December. If this happens, the volume and momentum patterns will be the tell – if it remains weak the higher we go, the bigger the warning.

Furthermore, the below Gann chart has been extremely accurate, keeping us on the right side of this uptrend. Note the 45-degree angle in red, which bottled up the last two pushes higher. Furthermore, note how accurate the time factors have been at identifying turning points. The next major cluster is in December, which coincides with the 45-degree angle intersecting the $133,000 level.

Reddit (RDDT)

Blue – We are completing wave 4 in a 5-wave pattern that started on the April low of this year. We need to hold $185 and then see a direct 5 wave bounce off the recent low to confirm this is in play. We should see a 5th wave push to $322 – $500 region. This will complete a very large 3 wave pattern off RDDT’s IPO low, which can allow for a multitude of outcomes once complete. So, from a technical perspective, if this scenario is in play, we will have to wait and see what unfolds when the uptrend pattern completes.
Green – We are in the middle of a 3rd wave within a larger diagonal pattern. This count should see a corrective bounce, followed by one more drop to the $173 – $140 region. This final drop does not need to happen, but if it does, these will be the targets that we will use to add to our position. The 3rd wave should target $765 – $999.

Applied Optoelectronics (AAOI)

Blue – We are completing wave 1 of 3. Note the messy push higher on lower volume and momentum. This is likely an ending diagonal for wave 1 and should see a 2nd wave retrace back toward $26 – $16. As long as $13.25 holds, we should see a large breakout follow.
Green – We already completed wave 2 of 3 and setting up for a large breakout. If we see a vertical move over $44.40, this will signal that we are in the early stages of a very large 3rd wave move.

Oracle (ORCL)

Blue – ORCL gapped higher in 3rd wave. We are in a 4th wave which should hold over $250 – $241. We will then push higher on less volume and momentum in the 5th wave, which would target $383 – $488.
Green – The earnings gap was the final exhaustion move of the A wave. We are in a B wave retrace that will break below $241. I do not want to see this B wave break below $179, or something more bearish could be in play. Once the B wave ends, we should see a C wave well into the $600s into 2026.

Advanced Micro Devices (AMD)

Blue – AMD is clearly in a termination wedge after its recent gap. Note the tight trading pattern that is trending higher on lower volume and momentum. We typically do not see 5th wave on max volume and momentum, which is why I am viewing this termination wedge as wave 5 of 3. The 4th wave should see a corrective drop back into the gap before staring at wave 5 toward the $288 – $391 region. Any drop must hold $158, or something more bearish could be playing out.
Green – When the termination wedge ends, we will only see a slight drop that holds $203. I have this as wave 2 of a larger 3rd wave. It implies that a larger gap is on the horizon, as we push toward the $500 – $600 region.

Applovin (APP)

Blue – We are in a very large ending diagonal pattern. We completed wave 3 and are in the middle of wave 4. It is currently targeting $483 – $416. As long as this 4th wave holds over $331, we should find a low and start wave 5 toward $1000.
Green – We are still in the 3rd wave and completing the B wave. We already struck a low, will hold over $534, and then continue higher toward $1000 in a larger 3rd wave diagonal pattern.

Ethereum (ETHUSD)

Blue – We just completed wave 4 of 3. The next move must be a 5-wave push over $4,762. We’ll then target around $6,700 for wave 3. The larger 5-wave pattern is targeting around $9,000 – $10,000. Any further weakness must hold $3,350 or this count gets invalidated.
Green – We will break $3,350 in a large 3 wave move. This will be a B wave of a larger 5th wave. The targets will be around $3,033 – $2,243. We must hold $1,862 for any bullish resolution into 2026 to manifest.

Broadcom (AVGO)

Green – AVGO is in a B wave that should fail to make new highs and then turn lower toward $314 – $292. This will set up a large C wave uptrend into 2026 with targets around $559, at minimum. Once we get the B wave low, and a new uptrend has started, we can get more accurate targets. Below $221 will be a problem for continued upside.
Blue – AVGO is in a standard 5 wave uptrend. We will breakout to new highs on decelerating volume and momentum, which will confirm this is a 5th wave. We will target $402 – $425 in the coming weeks to months, which will complete 5-wave uptrend off the April 2025 low.

Applied Digital (APLD)

Blue – We are in a 4th wave within a larger diagonal. We should drop to the $24 – $19 region to complete this 4th wave. Any sustained break below $19.75 will be concerning and put this count at risk. If we can hold $19.75, we should turn higher toward the $30 region to complete the 5th wave within this diagonal pattern.
Green – We are not in a diagonal. Instead, we are in a standard 5 wave pattern, and only in wave 4 of 3. We should bottom above $26.50 and then continue higher.

Innodata (INOD)

Blue – We are in the middle of a 3rd wave. We can see weakness test $64, but this level must hold. We will then continue this 3rd wave toward the $122 – $137 region. The larger 5 wave pattern should target $163, as long as supports hold.
Red – The bounce off the April low is a clear 3 wave pattern, so far. We will see a large drop that takes the shape of a 5-wave pattern. This drop will break through $64, which will be the first warning that the blue count is failing. If this happens, the odds increase that we will retest the April low.

Core Scientific (CORZ)

Green – CORZ appears to be tracing a very large cup and handle pattern. This is typical before 3rd wave breakouts. If this is in play, we should see a vertical push higher toward $44 – $70 on expanding volume and momentum.
Red – The next move is not a breakout, but instead a breakdown. It will be in the form of an aggressive 5-wave pattern, signaling that we are heading below the April low in an extended 2nd wave.

Galaxy Digital (GLXY)

Green – GLXY is setting up for a large 3rd wave breakout. We have a series of back-and-forth pushes higher that is holding over major support $37. As long as we hold over $28, the setup will remain valid. The pattern is signaling $134 as the 3rd wave target, if triggered.
Blue – We are in the final 5th wave in a very large diagonal pattern. The setup is pointing toward $67, if any further weakness holds over $24.

Riot Blockchain (RIOT)

Green – We are in the 5th wave of a diagonal pattern. This drop should hold $17.25 and then turn higher toward $26 – $38.
Blue – We are in wave 4 of 5. This drop will hold over $16.55 and then turn higher on lower volume and momentum towards the $26 region. This will complete the 5-wave uptrend that started in April of 2025, which would be followed by a period of volatility.

Iren Limited (IREN)

Blue – We are in a 4th wave within a larger 3rd wave. This drop is deep enough to satisfy this 4th wave. If we do see further weakness, it must hold over $36. We should then turn higher in an aggressive breakout over $74.15 as we move toward $149.
Green – We will break below $36 in a 3 wave move. This will be the B wave of a much larger swing higher. This drop can go as low as $18 and still maintain a long-term bullish posture but cannot break below.

TeraWulf (WULF)

Blue – We are starting wave 4 of C. This 4th wave should target around $10.50 – $7.65, then turn higher for wave 5, which would be targeting $23 – $31. Below $7.65 will invalidate this count.
Green – We are starting a B wave that would take us to $7.65 – $4.25. Once completed, we should see a 5-wave uptrend take us toward the $30 region.

Chainlink (LINKUSD)

Green – Chainlink’s price pattern has devolved into, at best, a diagonal pointing higher. This drop is too deep, which limits the path higher. If this count is in place, any further weakness must hold $12.80 and then turn higher in an aggressive 5-wave move. It will be a choppy move higher, which will have large swings in both directions.
Red – We are in a very large 2nd wave. Once we break below $12.80, the odds of this happening become elevated. The final target for this count will be around $3.

Conclusion:

The I/O Fund has been delivering top notch information with the Top 15 AI Stocks report for Q4 2025, the Top 10 New Ideas list for the Discovery tier and my Positions Report for the Advanced tier. Combined, we delivered 100 pages of research in the brief time frame of two weeks, all of actionable ideas within the AI space.

Regarding market risks, in a recent interview on Thoughtful Money, famed economist David Rosenberg stated that the percentage of the U.S. economy currently expanding—when weighted by population—is only 18%. In other words, 82% of the U.S. economy is flat or in contraction. To make this statistic even more startling, he noted that just six weeks ago, over 40% of the economy was expanding, signaling a rapid deterioration in growth.

The last two times we saw less than one-fifth of the U.S. economy expanding was the summer of 2020 and the winter of 2009—two of the most difficult periods for the American economy in decades. Yet today, the S&P 500, NASDAQ, Dow Jones Industrial Average are at all-time highs, while credit spreads remain near historic lows.

The reason lies in the remarkable fact that the small portion of the economy that is still expanding is tied to artificial intelligence, which continues to show no signs of slowing down. Though it may seem overly simplistic, the reality is that as long as hyperscaler’s capex continues to grow, it is unlikely that the U.S. economy will fall into a recession—even with more than 82% of its sectors already contracting.

As long as the AI economy continues to expand, and the broad market holds critical support levels, we will maintain a bullish posture.

The Discovery tier offers fast-paced research on new stock ideas the I/O Fund is interested in, with technical setups and comprehensive deep-dive analysis. Be the first to know what exciting new tech, AI and energy stocks the I/O Fund is tracking.

To subscribe to Discovery with 30% off, please click here to email usclick here to email us or email premium@io-fund.com and mention code DISCOVERY30.

Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.

Recommended Reading:

Positions Report – October 2025