Nov 3, 2026 · 60 min
Stockton sees confirmation, not forecasts, as markets weaken
Is A Market Breakdown Underway? | Katie Stockton
The conversation offers an evidence-based framework for judging whether equity weakness is a correction or the start of a broader breakdown.
- 1Technical confirmation requires more than a sharp selloff, with support, momentum, breadth, and trend signals all carrying weight.
- 2Stockton favors diversified, lower-volatility positioning over an all-or-nothing shift into bonds, gold, or other defensive assets.
- 3Elections, earnings, and four-year cycles may shape volatility, but changing market evidence matters more than fixed forecasts.
Don't miss
Stockton explains why investors should wait for technical stabilization and confirmation instead of reacting to a single sharp market decline.
The brief
Katie Stockton of Fairlead Strategies examines whether equity and AI-stock weakness has broken important support, distinguishing an alarming selloff from a confirmed technical breakdown.
Her framework prioritizes primary trends, Fibonacci retracements, momentum, and breadth, while allowing markets to diverge from the economy before a larger bear cycle is confirmed.
The discussion extends beyond stocks: rising yields and wider credit spreads complicate allocation, while gold may need stabilization or a breakout before becoming attractive.
Rather than forecast election or earnings outcomes, Stockton reacts to changing evidence and favors diversified exposure, selective technology, lower-volatility assets, and limited fixed income.
The standout idea is a disciplined refusal to make an all-or-nothing move: wait for trend confirmation, then adjust exposure as the evidence changes.
What was said on this episode
38 statements · 17 positive · 18 negative · 1 mixed · 2 neutral
Absent an oversold rebound, market breakdowns will likely be confirmed.
“If we don't see that rebound that the oversold metrics would suggest, then I think that's probably a message from the market that we have breakdowns being confirmed.”
Listen at 1:00
Major equity indices have not yet confirmed a decisive breakdown.
“So we wouldn't call this a decisive breakdown yet.”
Listen at 4:21
Average support levels are roughly 7–8% below current levels.
“And in general if you look at support levels i would say i'd put them in on average maybe seven or eight percent below the current levels that are in play”
Listen at 6:54
Confirmed breakdowns would deepen and prolong the equity pullback.
“It would not only suggest that the corrective phase or pullback should deepen, but also become more prolonged.”
Listen at 7:20
Short-term oversold conditions support near-term stabilization and support preservation.
“And right now we have a short-term oversold condition and that would support that we see stabilization and perhaps that does preserve the support”
Listen at 8:53
Few equity buy signals have appeared, including in bottom-up analysis.
“We don't have a lot of buy signals yet, even from a bottom-up perspective.”
Listen at 10:45
Gold has generated a technical buy signal.
“Interestingly, there is a signal that just popped up in the price of gold.”
Listen at 10:52
Credit spreads are elevated enough to represent a significant equity-market risk metric.
“Right now, one of our biggest inputs is credit spreads. So looking sort of across the board on that front, they are elevated to the point where we're really paying attention.”
Listen at 16:33
Fundamentals drive long-term market trends.
“We believe that the fundamentals drive long-term trends.”
Listen at 17:30
The AI long-term uptrend remains underway with positive momentum.
“And that long-term uptrend is underway, still has positive long-term momentum.”
Listen at 17:46
AI ETFs are testing support levels after the recent selloff.
“But AI, I think right now, it's just like the NASDAQ 100. If you look at an AI ETF, they're all testing support levels after last week's action.”
Listen at 18:45
Investors should hedge severe corrections with inverse ETFs and defensive exposures.
“And that's simply... a great time usually to get hedged and you can do it a top-down hedge, buy some inverse ETF maybe to cover part of that exposure and be more overweight in defensive or lower correlation areas of the markets.”
Listen at 19:23
Investors should hedge if the correction becomes materially more severe.
“And we wouldn't treat a correction as noise. We would certainly recommend investors get hedged through something that is a bit more severe than what we've already seen.”
Listen at 21:00
Long-term indicators will determine whether equities enter a bear cycle.
“But the bigger picture, are we entering a bear cycle? We will be referring to those long-term indicators for the major indices.”
Listen at 21:14
The equity trend has not yet reversed.
“Not yet.”
Listen at 21:40
Higher yields will cause some migration into fixed income.
“We do think that it will happen because we think there's been a secular shift higher in yields.”
Listen at 24:03
Fixed income should provide portfolio ballast as yields remain attractive.
“So we do have a bigger position than we have. and recently in fixed income. So we think there should be some migration to that as kind of ballast for a portfolio.”
Listen at 24:59
Gold should stabilize over the next few weeks near $3,900 support.
“So we're at this place where for the next few weeks, we would expect stabilization based on those indicators that could help preserve the support, which for us is around $3,900 per ounce.”
Listen at 28:36
Gold remains in a downtrend with continuing downside momentum.
“But the trend is certainly lower and it still has that downside momentum.”
Listen at 29:16
Gold stabilization would help confirm a potential low.
“We'd like to see stabilization and that stabilization serves to. sometimes confirm the signals that we're seeing.”
Listen at 30:21
Short-term oversold readings favor a positive market reaction to the election.
“if anything, the oversold readings on a short-term basis are more likely to be supportive of a positive reaction.”
Listen at 33:09
A bull market remains underway heading into year-end.
“But coming in to the year end, of course, there is still a bull market underway. We know that much.”
Listen at 35:36
A credit-spread breakout would likely make the first half of 2027 difficult for equities.
“if credit spreads break out and they're pretty close, uncomfortably close, I would say, well, that probably means the first half of 2027 will be difficult for the equity market.”
Listen at 35:54
A stronger year-end market finish remains possible despite worsening risk metrics.
“So I wouldn't rule out a stronger finish to the year, even if some of these risk metrics end up becoming a bit more decisive.”
Listen at 37:38
Future equity returns may be more muted than recent returns.
“So there are things like that that would suggest that going forward, the returns, just like they are this year in a way, are going to maybe be more muted.”
Listen at 40:45
Future equity returns are assumed to be more muted after the mature uptrend.
“So I think that's the assumption. And then we just continue to stick to our discipline of watching those longer term momentum indicators”
Listen at 40:55
The Fear and Greed Index is around 25, indicating extreme fear.
“So the fear and greed index is one metric that we track is around 25. which is in that sort of extreme fear territory.”
Listen at 42:25
Extreme investor fear is currently a contrarian positive for equities.
“the fear and greed index is one metric that we track is around 25. which is in that sort of extreme fear territory. So that would be more of a contrarian positive for the market.”
Listen at 42:25
Investors should diversify and increase defensive-sector exposure.
“Yeah, I think we like the idea of being diversified and having a bit more defensive sector exposure”
Listen at 43:42
Technology stocks should be held if they maintain support levels.
“as long as the technology stocks are able to hold on to support levels, we're very much keen on holding them as well”
Listen at 44:26
Portfolios should hold modest allocations to fixed income, gold, and Bitcoin.
“We're comfortable owning some fixed income, not a whole lot of it. We're comfortable owning some gold, again, not a whole lot of it. And we're also comfortable owning some crypto or Bitcoin, but again, not a whole lot of it relative to the overall portfolio.”
Listen at 44:45
Stronger risk signals would warrant reducing overall equity exposure.
“when we see the market, these risk signals get louder than they are right now, then we will recommend just kind of reducing that overall equity exposure”
Listen at 45:04
International equities should be underweighted relative to U.S. equities.
“So we would be. underweight international relative to the us”
Listen at 47:10
Short-duration Treasuries are currently more attractive than long-duration bonds.
“But probably the short end is a bit more interesting to us right now”
Listen at 48:20
Short-duration Treasuries currently look more attractive technically.
“Probably the short end is a bit more interesting to us right now”
Listen at 48:20
WTI above $105 would become an equity-market risk metric.
“So if we were to see a breakout from the triangle, which would happen above $105 per barrel, that could be one of those other risk metrics for equities”
Listen at 49:17
WTI above $105 would become an additional equity-market risk signal.
“if we were to see a breakout from the triangle, which would happen above $105 per barrel, that could be one of those other risk metrics for equities”
Listen at 49:17
Buy-and-hold investing should be challenged in favor of dynamic positioning.
“I'm challenging the buy and hold approach.”
Listen at 54:20
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Books & mentions
Some links are affiliate links — PodLume may earn a commission if you buy.
Investment Wisdom for Our Friends and Loved Ones
A finance guide featuring Stockton’s chapter on technical analysis and broader lessons from women in finance.
Fairlead Tactical Sector ETF
A related example of the tactical, evidence-based allocation approach discussed in the interview.
Amplify Fairly Tactical Bitcoin ETF
A related example of active exposure to a volatile asset within the Fairlead framework.
Weekly email
State of the Pod, every Monday
The week's most-discussed names and stories from podcasts, with the moments behind them. Free, five minutes, unsubscribe in one click.