Stock Market Analysis Summary
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Stock Market Commentary
Just as I made the case last week, the stock market looks set to end 2025 on a positive note. I am now thinking through what I want to buy in 2026. This planning comes despite the high odds of a significant pullback in the first half of the year. My key themes for now are commodities, beaten up software stocks (especially big cap), biotech (especially when insiders buy shares with public disclosures), holding on to as many AI-related plays as possible, and home builders. Of course, as the year progresses, my key themes can change.
I expect the United States to run the economy very hot in 2026 through lower interest rates, fiscal stimulus, and heavy investment. When the economy runs hot, production and consumption substantially increase, often rapidly. This dynamic leads me to commodities as a major investing theme. I already have exposure, but I want to add more as the opportunities present themselves (mainly through technicals). Alongside commodities, I remain very bullish on rare earth stocks, especially given they have already quickly sold off after the U.S. and China decided to pretend to exist in detente. This detente follows a brief flare up in tensions in October.
AI was 2025’s major theme, and I feel like I have enough investments in this theme. For now, I am just hoping to hold onto as many of them as I can. There are AI-related themes I am watching for opportunity in 2026. Semiconductor stocks have been key beneficiaries of AI investment, but Intel (INTC) fell well behind. The stock is finally benefiting, and I want to buy and more actively trade the stock again. Many software stocks took a beating in 2025 because of fears that AI would wipe out these companies. I want to buy these out of favor stocks in contrarian fashion, especially big cap software companies. In a hot economy, speculation should also run hot, meaning IPOs should become quite attractive. Many of these IPOs will likely have AI-related narratives.
I am also focused on biotech, which has had an incredible run over the past several months and has supported some of my best trades (especially where insiders provided bullish signals with substantial purchases).
Finally, home builders are a perennial theme that is facing unseasonal pressure right now. Thus, these stocks could become a major contrarian bet in 2026.
The Stock Market Indices
S&P 500 (SPY)
The S&P 500 reached an all-time high during a holiday-shortened week, invalidating the double-top that followed the Federal Reserve rate cuts. This breakout provides a runway for higher prices and supports my (new) expectation that market breadth will eventually break out above its primary downtrend and push toward overbought conditions.
NASDAQ (COMPQX)
The NASDAQ rallied back to its prior peak during the holiday-shortened week and still has room to reach a new all-time high near 23,963. Note well the higher low the tech laden index made during December’s brief breakdown below support at the 50-day moving average (DMA) (red line).
iShares Russell 2000 ETF (IWM)
IWM churned during the week but held above its 20DMA (the dashed line) but remained below its all-time high set earlier in the month. During Friday’s pullback to the 20DMA, I bought call options as my regularly scheduled trade around my core IWM position.
The Short-Term Trading Call When I Want to Buy
- AT50 (MMFI) = 58.6% of stocks are trading above their respective 50-day moving averages
- AT200 (MMTH) = 60.2% of stocks are trading above their respective 200-day moving averages
- Short-term Trading Call: neutral
AT50 (MMFI), the percentage of stocks trading above their respective 50DMAs, closed the week at 58.6%. The primary downtrend remains barely intact. Thus, I technically remain cautious, but the on-going press against resistance makes me expect an eventual, sustained breakout that leads to a test of overbought conditions at the AT50 70% threshold. Overbought conditions could provide the prelude to 2026’s significant pullback. I continue to maintain a neutral short-term trading call because of the AT50 downtrend. However, AT200, the percentage of stocks trading above their 200DMAs, remained above its prior primary trend. This positioning supports longer-term health for market breadth.
The Equities: I Want to Buy
Rio Tinto (RIO)
Description: Rio Tinto is a global mining company focused on iron ore, copper, and other industrial commodities.
Technical status: Rio Tinto (RIO) rode alongside its upper Bollinger Band, continuing to extend gains as it hit a new 3-year high.
Trade commentary: RIO is one of my best commodity plays in the current run-up in commodity stocks. The breakout in December delivered alone roughly a 15% gain month to date. I expect more upside as commodities benefit from an economy running hot.
Freeport-McMoRan (FCX)
Description: Freeport-McMoRan is a mining company primarily engaged in copper production.
Technical status: Freeport-McMoRan Inc (FCX) rose upwards throughout the week, hitting a brand new high for the year.
Trade commentary: FCX has traded sideways for years, and I believe copper is overdue for a sustained breakout. I entered FCX earlier when I began highlighting commodities, and it remains one of my strongest commodity positions. Copper should benefit particularly well from an economy running hot with various infrastructure buildouts from AI data centers to energy to electrification. I took profits on FCX in July but jumped back in on my hot commodity thesis.
Cleveland-Cliffs (CLF)
Description: Cleveland-Cliffs is a steel producer supplying flat-rolled steel products to industrial markets.
Technical status: Cleveland-Cliffs (CLF) held 200DMA support and followed with a bullish 50DMA breakout that recovering prior post-earnings gains.
Trade commentary: CLF collapsed after a post-earnings downgrade and concerns about financing, but 200DMA support held firm. I entered near that support, and the stock has since produced a bullish 50DMA breakout and started filling its post-earnings gap. I view CLF as a cyclical recovery play tied to both commodities and rare earth narratives (first revealed during earnings).
Ucore Rare Metals, Inc (UURAF)
Description: Ucore Rare Metals is a Canadian company focused on rare earth mineral processing and development.
Technical status: Ucore Rare Metals, Inc (UURAF) broke out above its 20DMA and tested 50DMA resistance after a sharp pullback from all-time highs.
Trade commentary: UURAF was cut more than in half after peaking during the hype on rare earths. I accumulated shares during this consolidation and would add aggressively near 200DMA support because I view UURAF as a solid long-term rare earth processing play.
iShares Biotechnology ETF (IBB)
Description: IBB is an exchange-traded fund that tracks a broad basket of biotechnology companies.
Technical status: The iShares Biotechnology ETF (IBB) broke out above its 20DMA, trending higher in a near-straight run from yearly lows.
Trade commentary: IBB sold off during tariff-related noise earlier in the year but has rallied strongly since. Recognizing the sector-wide uptrend helped explain why my biotech trades performed well in 2025.
Syndax Pharmaceuticals (SNDX)
Description: Syndax Pharmaceuticals develops oncology-focused pharmaceutical therapies.
Technical status: Syndax Pharmaceuticals (SNDX) sustained gains following a strong post-earnings breakout.
Trade commentary: SNDX caught my attention after heavy insider buying by the CFO and chief medical officer. Following a 21% post-earnings gain, SNDX continued to perform well and reinforced insider buying as a winning theme for me. I continue to hold the stock as the recent uptrend remains intact. The most recent catalyst for SNDX was on November 4th (shortly after earnings) when the “U.S. FDA granted approval for Revuforj® (revumenib) to treat relapsed or refractory acute myeloid leukemia with an NPM1 mutation, expanding the drug’s use in both adult and pediatric patients where alternative options are limited”.
Intel Corporation (INTC)
Description: Intel designs and manufactures semiconductor products and related technologies.
Technical status: Intel Corp (INTC) broke down below its 50DMA, despite its past AAPL partnership surge.
Trade commentary: INTC is a recovery play rather than an AI-specific bet for me. I missed the 50DMA breakout for a trade and am now waiting for another technically supported entry before buying.
Salesforce (CRM)
Description: Salesforce provides enterprise cloud-based customer relationship management software.
Technical status: Salesforce (CRM) broke out and held 200DMA support, entering bullish territory.
Trade commentary: CRM is my top, big cap beaten-up software stock. The stock is down 20.4% year-to-date with a trading history that has featured just 4 prior losing years since the stock started trading in 2004. Despite on-going valuation concerns and fears CRM is getting undermined by the very same AI technology it touts as revolutionizing its own business, the stock has reclaimed 200DMA as support. Thus, CRM is in bullish position for the first time this year. I am still waiting until January to start buying.
Adobe, Inc (ADBE)
Description: Adobe develops software products for digital media creation and marketing.
Technical status: Adobe Inc (ADBE) broke out above the 50DMA, steadily churning below 200DMA resistance.
Trade commentary: ADBE is deeply discounted relative to prior highs and remains below 200DMA resistance. Like CRM, ADBE is a beaten-up big cap software stock that is on the losing end of AI fears. I believe the company is making the right moves with AI, but I need the technical confirmation of a 200DMA breakout before buying.
Renaissance IPO ETF (IPO)
Description: IPO is an exchange-traded fund that tracks newly listed public companies.
Technical status: Renaissance IPO ETF (IPO) recovered above its 200DMA and pivoted around its 50DMA.
Trade commentary: I have long owned IPO as a better risk-adjusted way to speculate on innovation than the ARK funds. Despite trading well off its high for the year, IPO looks poised to benefit from an economy running hot. A hot economy should deepen the attractiveness of speculation and bring a lot of new companies to market, especially in AI. I like the current consolidation above 200DMA support as a potential launchpad for buying in 2026.
iShares US Home Construction ETF (ITB)
Description: ITB tracks U.S. home construction and homebuilding-related companies.
Technical status: The iShares US Home Construction ETF (ITB) remained in a bear market below its 200DMA.
Trade commentary: ITB has underperformed seasonal expectations and remains one of the few areas still in a bear market. I remain focused on the longer-term benefit homebuilders could see if the economy runs hot, especially with interest rates set closer to or even below the inflation rate.
Be careful out there!
Footnotes
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“Above the 50” (AT50) uses the percentage of stocks trading above their respective 50-day moving averages (DMAs) to measure breadth in the stock market. Breadth defines the distribution of participation in a rally or sell-off. As a result, AT50 identifies extremes in market sentiment that are likely to reverse. Above the 50 is my alternative name for “MMFI” which is a symbol TradingView.com and other chart vendors use for this breadth indicator. Learn more about AT50 on my Market Breadth Resource Page. AT200, or MMTH, measures the percentage of stocks trading above their respective 200DMAs.
Active AT50 (MMFI) periods: Day #137 over 20%, Day #26 over 30%, Day #24 over 40%, Day #19 over 50% (overperiod), Day #12 under 60% (underperiod), Day #110 under 70%
Source for charts unless otherwise noted: TradingView.com
Full disclosure: long IWM shares and calls, long ITB shares and calls, long CLF, long FCX, long RIO, long UURAF, long SNDX, long IPO
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*Charting notes: Stock prices are not adjusted for dividends. Candlestick charts use hollow bodies: open candles indicate a close higher than the open, filled candles indicate an open higher than the close.
* Blog notes: this blog was written based on the heavily edited transcript of the following video that includes a live review of the stock charts featured in this post. I used ChatGPT to process the transcript.