Wrapping Up a Good Year on a Sour Note. What’s Next for 2026?

2025 was a strong year for the indexes, with the S&P 500  (SPY)  gaining roughly 17% and the Nasdaq 100  (QQQ)  jumping 21%. However, we are ending on a distinctly sour note. We’ve seen four straight days of losses during the "Santa Claus rally" timeframe, which is a period where bulls usually have the upper hand. 

It seems buyers were overanxious to catch end-of-year strength, creating a classic "sell-the-news" dynamic instead. In this thin holiday market, traders didn’t even bother trying to ignite much speculative action.

Unfortunately, the new year begins on a Friday. This is likely to produce another thin, random session before the "real" money returns from the holiday break and goes to work next week.

There is some chatter that because 2025 delivered such big gains, we’ll face a wave of profit-taking in early 2026 as investors finally trigger the tax implications they've been delaying. That’s possible, but I also expect a "January Effect" rebound in the names that were beaten down for tax-loss selling in December.

Those technical moves should shake out fairly quickly as we head into the fourth-quarter earnings season in late January. Between a fresh round of economic data and an upcoming Fed meeting, there will be plenty of drama. But more importantly, I expect the market to return its focus to valuation and technical patterns — which is always good news for stock pickers.

I’m excited about 2026, not because I expect the indexes to roar higher, but because I believe there will be plenty of volatility and high-quality trading opportunities.

Looking back, the most interesting thing about 2025 is that almost no one did a good job of predicting it. 

The "experts" warned that tariffs would be the end of the world and spark hyper-inflation — they didn't. They warned the AI bubble would pop like the 2000 dot-com crash — it didn’t. They warned the economy would crater — instead, it remained resilient despite a softening jobs market. If you tried to navigate this year based on those macro predictions, you likely had a very difficult time.

I’ve been contemplating my trading and investing resolutions for 2026 and will have a follow-up column detailing those thoughts soon. There is always room for improvement in this business. The best investors never stop learning.

Best wishes for the New Year. I hope you will join me in making 2026 the best year ever.

At the time of publication, Rev Shark had no positions in any securities mentioned.