Previewing 2026 from our consultants… a 13% Q1 surge?… why we must always query “without end” shares… the vital ingredient for a robust 2026… brace for impression
As I write on Monday, markets are digesting dramatic information from the weekend: U.S. forces carried out a high-stakes navy operation in Venezuela, capturing President Nicolás Maduro and his spouse.
Maduro is now in New York awaiting his first court docket look. He faces fees together with narco-terrorism conspiracy, cocaine importation conspiracy, and weapons offenses.
President Trump has signaled a willingness to supervise Venezuela’s transition and probably faucet its huge oil reserves. For now, nevertheless, Caracas stays underneath interim management, and the day-to-day realities of U.S. involvement – not to mention governance – stay murky.
As I write, the market is sharply greater. Vitality and oil-service shares are climbing as merchants value in the opportunity of eventual U.S. involvement in Venezuela’s oil patch. Gold, silver, and defense stocks are firmer as traders hedge geopolitical threat. However there’s not sufficient concern of further battle to weigh on threat belongings, so even the Nasdaq is up practically 1%.
Now, regardless of these beneficial properties, this information is unlikely to be a sustained driver of market returns. Rebuilding Venezuela’s vitality advanced would take years, and a broader regional battle nonetheless seems unlikely.
That mentioned, this information dovetails properly into what will matter in 2026: volatility, positioning, and proudly owning the correct belongings when headlines hit.
And that brings us to our consultants and their 2026 forecasts…
I’ve spent the previous couple of days reviewing the 2026 predictions from Louis Navellier, Eric Fry, Luke Lango, and Jonathan Rose
A free consensus emerges:
- Danger belongings are going greater
- AI will change the market in 2026, in addition to the concept of a “without end inventory”
- Earnings progress pushed by AI-powered effectivity would be the defining issue separating winners from losers
- However even in case you personal the correct shares, 2026 will take a look at your conviction with sharp, frequent volatility
Let’s unpack what this implies and the right way to put together each your portfolio and your mindset for the yr forward.
A robust tailwind hiding beneath the floor
Kicking off 2026, we now have near-record-high valuations, a cautious Fed, and inconsistent confidence within the AI commerce. Regardless of that, veteran dealer Jonathan Rose of Masters in Trading Live sees a bullish setup that the majority traders are overlooking.
Why?
The brief finish of the yield curve.
To verify we’re all on the identical web page, the yield curve reveals the rates of interest traders earn on U.S. Treasury bonds throughout totally different maturities – from short-term payments to long-term bonds.
Underneath regular circumstances, longer-term bonds yield greater than short-term ones, compensating traders for locking up their cash longer.
Right here’s our present yield curve…
Supply: USTreasuryYieldCurve.com
Right here’s Jonathan on why the brief finish has him bullish:
The Fed has quietly instructed us what they’re going to do on the entrance finish of the yield curve in 2026. They’ve signaled they’ll be shopping for someplace within the ballpark of $240–$300 billion in T-bills…
They’re successfully stepping in to soak up near 70% of all the brand new provide on the brief finish.
They don’t need to name that quantitative easing. However functionally, it’s a type of focused QE on the entrance finish.
Briefly, the Fed has signaled it can purchase a lot of the new short-term Treasury provide. This may put upward stress on costs, downward stress on yields, and ease volatility.
And this has necessary downstream results for shares.
Right here’s Jonathan:
When the curve steepens and the Fed is actively supporting the entrance finish, bond volatility tends to get sucked out of the system…
If bonds cease whipping round, traders who have been hiding in “protected” belongings begin getting extra snug reaching out on the chance curve.
They transfer additional out in length, additional out in credit score, additional out into equities.
And that’s the place you possibly can see some fairly highly effective risk-on strikes that don’t look linked to the headlines in any respect.
As to that highly effective risk-on transfer, Jonathan believes the S&P 500 may surge as a lot as 13% by the tip of Q1. From right now’s stage, that might put the S&P close to 7,800.
That’s an aggressive name – and he acknowledges it – however his message to traders is easy: don’t let emotion override what market construction is signaling.
Right here’s his backside line:
After I zoom out and have a look at the plumbing, this setup appears to be like extraordinarily bullish for threat belongings into Q1.
However there’s a catch – AI is rewriting the principles on “without end shares” so a Q1 surge could not raise all boats
Know-how has at all times reshaped markets.
However in previous many years, innovation moved slowly sufficient that dominant firms may stay leaders for years – even generations – rewarding affected person, buy-and-hold traders.
Based on our macro investing skilled Eric Fry of Fry’s Investment Report, that outdated playbook is breaking down – and AI is the rationale.
Corporations live, respiratory organisms – they only so occur to subsist on a gradual weight loss program of market share beneficial properties and/or increasing revenue margins.
And in addition, very similar to us fragile people, firms get pleasure from a lifetime of indeterminate size. However their lifespans do ultimately come to an finish.
Most traders ignore or overlook this necessary actuality. They have an inclination to think about their core investments as “without end shares.”
However that form of perspective generally is a harmful one – particularly now that synthetic intelligence is operating amok within the international financial system.
AI is spawning hundreds of such firms, a lot of which can conquer and exchange established firms which will appear indomitable right now, if not immortal.
The reality is that firms that fail to leverage AI for effectivity beneficial properties threat displacement by rivals who do. And the tempo of disruption has accelerated past something we’ve seen in earlier know-how cycles.
Given this, Eric urges traders to pressure-test each new funding concepts and present holdings in 2026 by asking two vital questions (each associated to AI):
- Is that this firm introducing a major effectivity enhance, relative to the established, market-leading services or products?
- Is that this firm making use of new applied sciences to spice up the effectivity of its operations?
And on the core of each questions lies one factor: earnings.
Which brings us on to what will be the defining theme of the brand new yr.
The shift from “how briskly?” to “how worthwhile?”
Relating to AI, we’ve crossed a threshold. Corporations will both leverage AI successfully or now not be capable to compete in right now’s market.
However – critically – the stage the place all AI-related shares rise is behind us. We’ve reached a brand new market atmosphere that requires proof that AI is boosting backside traces.
Right here’s how our know-how skilled Luke Lango of Innovation Investor frames this shift:
The primary section of the AI Growth was about one query: How briskly can we get compute on-line?
The 2026 section turns into: How a lot revenue does this compute generate?
That shift doesn’t kill AI spending. It simply concentrates it.
Like Eric, Luke says that the businesses that successfully leverage AI for effectivity would be the winners this yr, writing that they ship…
Much less waste, extra returns, and extra earnings focus…
The punchline is easy: AI turns into the dominant engine of U.S. progress … and the inventory market turns into much more concentrated round whoever owns that engine.
So, the query for traders waiting for 2026 turns into “how will we establish which firms will probably be on the middle of this focus?”
The fingerprints of elementary power
That is the place legendary investor Louis Navellier, editor of Growth Investor, offers us with a sensible framework.
Louis has constructed his profession round quantitative, fundamentals-driven inventory choice. And in a current challenge of his free e-newsletter Market 360, he laid out precisely what traders ought to search for in essentially sturdy firms positioned to learn from AI-driven effectivity:
- Spend money on high-margin firms that dominate their enterprise
- Alongside these traces, firms which have margin growth are inclined to publish larger earnings surprises.
- Spend money on firms with sturdy forecasted gross sales and earnings.
- Search for firms that see optimistic analyst revisions prior to now three months, as these sometimes publish earnings surprises.
These components constantly level towards firms with sturdy earnings energy – the type finest positioned to learn from AI-driven effectivity beneficial properties.
So, if 2026 is about “present me the cash” like Luke suggests, then Louis’ quantitative method that identifies firms already demonstrating that profitability will probably be extra necessary than ever.
In order for you assist evaluating your personal holdings by means of this earnings lens, Louis’ Inventory Grader is a superb device (a subscription to considered one of Louis’ providers is required). You merely plug in your shares, and it’ll immediately grade them from A to F primarily based on Louis’ quantitative system.
If you have a Stock Grader account, log in here.
However even with the correct shares, brace for a wild trip
Lastly, regardless of the bullish outlook, none of our consultants count on a easy trip in 2026.
Again to Luke:
Even when the S&P rips greater, 2026 is probably going a stomach-churner. Not as a result of the bull case is fallacious … however as a result of the market is getting into the section the place all the things issues once more…
The market doesn’t want a recession to right 10–15% when valuations are elevated.
It simply wants a cocktail of charges backing up, one hyperscaler pausing a mission, a financing headline, or a “revenue margins are peaking!” panic from somebody with a chart and an excessive amount of confidence.
Historical past backs this up.
In a typical yr, markets expertise at the very least one 10% correction. However Luke reminds us that in the course of the late-Nineteen Nineties tech increase, the Nasdaq endured six separate 10%+ pullbacks – even because it marched greater total.
Right here’s Luke once more:
We should always assume a number of corrections [this year] as a result of that’s simply what occurs at this level within the cycle. You get large steps ahead and large steps backward.
Right here’s the larger level: volatility isn’t the enemy of the bull market. It’s the admission value.
Jonathan confused this similar takeaway in his 2026 forecast:
There will probably be scares, dips, ugly candles, and scary headlines alongside the way in which. That’s the price of admission…
[But I’m] extremely bullish into Q1 2026.
Coming full circle: what 2026 will deliver
Once you join the threads from Jonathan, Eric, Luke, and Louis, a transparent image emerges.
There will probably be actual alternative to earn cash in 2026 – however seemingly in fewer shares, and with extra nerve-rattling value motion alongside the way in which.
Count on the market to reward AI-driven effectivity, concentrating beneficial properties amongst a smaller group of firms that may reveal increasing margins and earnings energy.
However brace your self for sharp corrections that may shake out anybody anticipating a straight line greater.
Luke captured many of those themes as he wrapped up his 2026 forecast, so I’ll let him take us out right now:
The 2026 inventory market in a single sentence…
“The S&P rips greater on AI-led earnings and supportive coverage — nevertheless it does it whereas violently shaking out anybody who expects a straight line.”
So, the right emotional posture for 2026 isn’t “calm confidence.”
It’s extra like: helmet on, eyes open, dry powder prepared, and don’t confuse volatility with the thesis breaking….
2026 will reward the investor who understands the map… and might preserve their arms on the saddle whereas the market tries to throw them off.
Have a very good night,
Jeff Remsburg
