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The market’s been on a solid run, and while that’s great, I’m starting to think about what’s next. After three consecutive years of strong gains, I’m expecting 2026 to be mildly higher — nothing dramatic but positive.
The key isn’t chasing what’s already extended. It’s finding what’s been building quietly in the background.
I’m looking for stocks that have been consolidating for a while, not running up a lot. I want to see something grounded breaking out — stocks that just started breaking out, not stocks that have been on fire. If the mega caps start coming back up, we could see a really strong rally. But I’m also watching for a sector rotation that could shift the playing field entirely.
Right now, I think semiconductors are gonna take a little break. Some of the names you’ve seen go up — airlines and basic materials — might start cooling off.
Meanwhile, the Magnificent Seven and stocks that have been consolidating, like Palantir (PLTR) and Amazon (AMZN), could be the ones to watch. That’s the rotation I’m positioning for.
My 2026 Market Predictions
The Federal Reserve is likely to lower rates twice this year, but not as early as many expect. Instead of March or May, I see the cuts beginning in June or July.
A slower path to easing means parts of the market that have been banking on rapid rate declines may struggle while sectors tied to steady economic activity could benefit. These cuts should provide a gentle tailwind — not a surge — which fits the broader outlook of a mildly higher market.
I also expect volatility to stay elevated. There’s enough on the horizon to trigger multiple spikes, and seeing four to six volatility surges this year wouldn’t surprise me. That kind of environment reinforces the need for risk management and selective positioning.
Commodities should stay interesting too. I think oil remains below $60 and gold stays elevated thanks to global uncertainty and investors looking for safety.
Bitcoin, on the other hand, looks like it’ll stay in a channel. I’m not expecting major action in the near term. Maybe the second half of the year will bring more, but right now I expect consolidation.
Sectors and Stocks I’m Watching
Sector rotation is where things get especially interesting. I think Consumer Discretionary (XLY), Financials (XLF) and Communication Services (XLC) are gonna cool off a bit because interest rates aren’t likely to fall as quickly as many hope.
But other areas are setting up much better…
I expect Semiconductors (SMH) and Technology (XLK) to outperform. Momentum is shifting back toward hardcore AI infrastructure — chips, not software — as companies race to upgrade systems that can’t keep pace with rapidly advancing hardware.
That puts chipmakers and supporting technology right in the sweet spot of the next wave of demand.
For individual names this year, my top picks remain Nvidia (NVDA) and Eli Lilly (LLY). Lilly with its weight loss drugs is just getting started and Nvidia with its expanding AI dominance continues to sit on enormous opportunity.
Both are positioned at the center of powerful trends that aren’t slowing down.
On the short side, Lamb Weston (LW) has weak guidance, pricing pressure and poor technicals. GoDaddy (GDDY) faces a need for a major reinvention and I don’t see a clear path for how they pull it off.
The bottom line: This year is about finding quality names that have been basing, not chasing momentum that’s already extended. Position yourself for the rotation, not the exhaustion.
I hope that helps!
Roger Scott
Roger Scott Trading
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We develop tools and strategies to the best of our ability but no one can guarantee the future. There is always a risk of loss when trading. Past Performance is not indicative of future results. The profits and performance shown are not typical. The return performance shown is based on live signals published in real time, shared during the Pre-Market Must Watch session. These are not a backtest or historical study, but all returns must be considered hypothetical. From 8/13/2025 through 12/19/2025, there have been 61 live signals with a 75.4% win rate. Winning “trades” would have produced an average peak move of 64% if the “trade” was timed perfectly to close at the peak market price. Losing “trades” averaged -15,% which would have resulted in an average return of 44.6% per “trade”, including both winners and losers, with an average hold time of less than one day.
