RJ Hamster
2026 – Year of the Bear
Delivering World-Class Financial Research Since 1999
Editor’s note: Don’t assume this volatility is over…
In the markets, winning cures all. When things are going well, it’s like sailing with the wind at your back. That’s what many folks have experienced this year, as 2025 is on track to be another fantastic year for investors.
But with volatility accelerating in the back half of this year, investors are uncertain about the future of the markets as we approach 2026.
So in today’s Masters Series, Keith Kaplan, CEO of our corporate affiliate TradeSmith, shares his prediction about where stocks are headed moving forward…
2026 – Year of the Bear
Thirty-three days…
That’s all it took for the S&P 500 Index to plunge 34% during the COVID-19 crash in early 2020.
It was the fastest breakdown of its kind in modern U.S. stock market history. And its speed stunned even the most seasoned investors.
Scott Minerd was the chief investment officer at Guggenheim Partners – and a Wall Street veteran who’d lived through the 1987 crash, the dot-com bust in 2000, and the 2008 financial crisis.
On March 23, 2020, he told CNBC: “In my entire career, I’ve never seen anything like the speed of this decline.”
Days earlier, Mohamed El-Erian, the chief economic advisor to Allianz, told the network: “I’ve never seen markets seize up like this.”
He was referring to the New York Stock Exchange’s policy to halt trading for 15 minutes if the S&P 500 drops 7% from the prior close. In 2020, that “circuit breaker” tripped on March 9, 12, 16, and 18 – each time in the first minutes of trading as the market went into freefall.
The S&P 500 usually moves about 0.7% to 0.8% a day. These drops were nearly 10 times larger… and happening in minutes. That’s an order-of-magnitude jump in volatility.
And during the tariff-driven “flash crash” this April, we saw another lightning-fast sell-off.
In the days after an announcement by the White House on sweeping tariffs, the S&P 500 plunged about 19%. And individual stocks were hit even harder – some fell 40%, 50%, or even 70% in a matter of days.
This is a different breed of volatility – compressed, chaotic, and transmitted through an information network that moves at light speed.
For investors, the whiplash can be brutal. You don’t get a warning. You don’t get time to think. You just wake up to gut-wrenching losses and wonder what hit you. If you don’t have a plan in place before the plunge starts, it’s already too late.
It’s why my team and I at TradeSmith have created a new sell signal to help you prepare for these kinds of sudden sell-offs. It’s specifically designed to help you avoid the fast, painful, whiplash sell-offs that are becoming more and more routine.
Without it, you likely won’t be protected if we see a repeat of April 2025… or worse.
And as I’ll get into in a moment, a legendary Wall Street veteran we’ve partnered with believes 2026 will be the Year of the Bear.
First, let’s look at what’s causing volatility to accelerate. To do that, we have to look at what has been building underneath the surface of the market over the last few years…
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Let’s start with the obvious: This bull market is one of the “narrowest” on record.
This year, two popular AI stocks, Nvidia (NVDA) and Google parent Alphabet (GOOGL), accounted for about one-third of the S&P 500’s total gains.
And the Magnificent Seven – a group of seven of the largest and most influential tech stocks – now represent 35% of the S&P 500, up from 12.3% in 2015.
When a handful of giant stocks carry this much influence, the entire market becomes fragile.
We saw a similar setup in the late 1990s. Cisco Systems and a few other dot-com stars dominated the indexes. When they fell, they pulled the entire market down with them.
And this isn’t the only factor speeding up market action. There’s also the growing influence of machine trading.
Today, algorithms account for up to 80% of U.S. stock trading volume.
And high-speed trading systems now execute in microseconds – roughly 3,000 to 10,000 times faster than a human blink.
By some estimates, about half of those trading applications now use AI.
When these machines sense weakness, they don’t debate. And they don’t sleep on it. They fire buy and sell orders at speeds a human brain can’t comprehend. By the time most investors recognize what’s happening, the damage has already spread.
We’ve already seen early versions of the devastation this can wreak on stocks.
In 2022, Meta Platforms (META) plunged 26% in a day. This erased more than $230 billion in market value – the biggest one-day hit in history.
A nearly trillion-dollar company falling that far that fast is not a rethink of the fundamentals. It’s a machine-driven rush for the exits.
And META isn’t the only giant that has been hit with that fierce velocity. That same year, another social media stock, Snap (SNAP), plummeted 43% in a day. A year earlier, after a false takeover rumor, Pinterest (PINS) sank about 15% in minutes.
Giant stocks didn’t behave like this 10 or 20 years ago. But they do now.
And there’s a third force shaping this new, more intense strain of volatility – the speed of information itself.
Most investors no longer wait for official data, company filings, or Wall Street research before they hit the buy or sell button. And they don’t peruse the pages of the Wall Street Journal or Barron’s for their stock market news.
Instead, they react to posts, rumors, and memes that spread across the Internet before traditional outlets even catch wind of the story.
In fact, researchers at Indiana University found that shifts in sentiment on Twitter could predict market moves with surprising accuracy – sometimes hours before prices moved.
When a story goes viral, investors pile in or rush out all at once. What used to unfold over days now unfolds over minutes.
That’s what sent meme stock GameStop (GME) on a roller-coaster ride in 2021. The struggling video-game retailer rocketed more than 1,500% before collapsing as much as 90% in the weeks that followed.
When you stack these three forces together – a top-heavy market, machines trading at lightning speed, and the amped-up social media news cycle – you get a market that behaves very differently from the one most of us grew up with.
And according to the veteran market forecaster we’ve partnered with to launch our new sell-alert system, the next downturn could move faster still.
Marc Chaikin’s first day as a broker on Wall Street was October 7, 1966.
Over his nearly 60-year career, he has advised billionaire traders like Steve Cohen, George Soros, and Paul Tudor Jones – people who don’t return your call unless you bring real edge.
Bloomberg and Reuters carry his Chaikin Money Flow indicator on their terminals. Hedge funds and banks around the world use it to spot shifts in institutional buying and selling pressure.
Even more impressive are the warnings Marc has shared with his more than 800,000 followers worldwide:
- In early 2022, he sounded the alarm on the post-pandemic bull run, just 90 days before stocks fell into a bear market.
- In early 2023, he said stocks were about to kick off an extraordinary recovery and shoot up 20% or more… right before the S&P 500 gained 26% that year alone.
- And earlier this year, he warned of a violent market shift, just before the S&P 500 plunged 19% following the Liberation Day tariffs.
And based on decades of market data, he now says we have a 65% chance of seeing a bear market in 2026, with an average market loss of 20%.
That’s just the average loss he sees coming. Some stocks will fall less, and some will fall more.
That’s why we’ve created our new early-warning system. We built it for exactly the kind of volatility shocks, fast trend breaks, and tipping-point conditions Marc sees coming next year.
It’s sensitive to even the slightest bearish tremor in a stock. If one of the stocks you own begins to experience abnormal short-term volatility, you’ll automatically be alerted.
And our new system doesn’t just tell you when to get out of stocks before they drop.
It also pinpoints when to get back into them ahead of the explosive rallies that follow.
That’s why you shouldn’t give up on this volatile market… and prepare to take advantage of these powerful cycles – both in the short and long term.
Sincerely,
Keith Kaplan
Editor’s note: Keith and Marc are going on camera to detail how their unique system works during their Tipping Point 2026 event, which airs on Tuesday, December 16, at 10 a.m. Eastern time.
Plus, Marc will get into more detail on why he’s calling 2026 the Year of the Bear – including the four-year cycle that has played out over more than a century of data.
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