Through the first month of Q4, emerging markets have outpaced their developed market counterparts by more than 1.5% (thru 10/27) looking at the iShares MSCI Emerging Markets ETF (EEM) and iShares MSCI EAFE ETF (EFA). This continues a trend that began in Q3, though both have improved on recent highs with EFA trading at all-time highs and EEM at fresh 52-week highs. EEM has simply outpaced EFA and the broader market in recent months, leading EEM to a stellar fund score of 5.61, while EFA’s is still a strong 4.4. The notable difference between the two ETFs’ fund scores lies in EEM giving a market RS buy signal against the S&P 500 Equal Weight Index (SPXEWI) back in September, while EFA maintains a market RS sell signal given back in December 2009.  

Emerging markets’ recent rally has been positive enough comparatively to developed markets to cause the RS chart between EFA and EEM to reverse down into a column of Os. Prior to the reversal into Os on 10/27, the chart had been in a column of Xs since May 2021, highlighting developed markets during that period with EFA outperforming EEM by more than 17% (5/5/2021 – 10/27/2025). With the inverse RS chart of EEM vs. EFA having been in Xs since late September, the EFA vs. EEM RS chart reversal offers further confirmation of emerging markets superior performance in the near-term.

While the EFA vs. EEM RS chart (as well as its inverse) continue to favor developed markets (EFA) in the long-term, the reversals to favor emerging markets during the short-term gives enough evidence to add more emerging markets exposure to an international allocation.

In yesterday’s trading, the S&P 500 (SPX) reached a new all-time high for the 43rd time in 2025. While this is an impressive feat, it still puts the index behind last year’s pace when it notched 51 record highs by the end of October, on its way to 62 high watermarks for the year. With the S&P possibly on track to hitting 50 records in back-to-back years, we were reminded of an article published in Bloomberg around this time in 2023, the first year in a decade that S&P didn’t reach a new all-time high. The Bloomberg study found that the market has historically performed significantly better after years when it did not reach a record high. Using data since 1928, the study found that in when the S&P didn’t reach a new high in a calendar year, the index gained an average of more than 10% the following year. Meanwhile, following years when the S&P recorded more than 30 new all-time highs, the average performance the following year was less than 3%, which is a discouraging datapoint with the market notching 62 new highs in 2024 and 40+ new highs this year. However, the long lookback may skew the data in favor of the “zero years.” From the crash in 1929, the market did not reach new all-time until 1952, 23 years later.

To get a better idea of the how the index has performed in the modern era and remove the skew of the recovery from the Great Depression, we looked at the S&P 500’s returns since 1980. We found that in the 45 years since 1980 (not including 2023), the S&P 500 has reached a new all-time high in 30 of those years. Like the longer-term data, we also found that the market performed better following years with no new highs, however, the difference was not as dramatic.

Following the 15 years that SPX did not reached a new all-time since 1980, it gained an average of 13.5% the next year; meanwhile, following years when the market made at least one new high it gained an average of 8.8% the next year. Interestingly, and a hopeful datapoint for 2025, since 1980, the market has actually had the best performance following years when the market notched 40 to 50 new all-time highs, gaining an average of over 19%. While the 40 – 50 new highs performance is an interesting statistic, we wouldn’t put too much stock in the notion that this is a particular “sweet spot” for the market – there have only been five such years since 1980 and it feels more coincidental than anything else. However, bulls can take some comfort that the performance for years with many record highs has been significantly better in the modern era than it was in the data going back to 1928.  We also don’t have to go back too far to find the last stretch when the market hit more than 30 all-time highs in three consecutive years. In 2019, 2020, and 2021, the market notched 34, 38, and 79 new records respectively. So while the market has now posted more than 100 record highs since the beginning of 2024, it doesn’t mean that performance will necessarily suffer next year.

Daily Option Ideas for October 28, 2025