Watch Out For The Market’s 2026 Balancing Act
Watch Out For The Market’s 2026 Balancing Act
Written by Michele ‘Mish’ Schneider
By Geoff Bysshe January 04, 2026
The market’s biggest headwind in 2026 may not be what you investors are thinking.If history is any guide, Wall Street is going to have a very difficult balancing act in 2026—and it’s not between the Bulls and the Bears. In fact, it’s between the Bulls and the Bulls.As you can see from the table below, there isn’t a single major bank with a target for the S&P 500 in 2026 that’s lower than where we currently stand at about 6,900.
While some may see this as bullish, the contrarian view is quite clear.In the words of Warren Buffett:
“Be fearful when others are greedy and be greedy when others are fearful.”Visually, the chart below shows that over the last several years, Wall Street targets have tended to be below the current market price, except at the beginning of last year (2025), which proved to be a period of overly optimistic expectations.
With respect to last week’s market outlook, I would not call the current environment a euphoric top, but finding a narrative that will provide an increasingly bullish consensus looks like it will be hard to find.
“Give them a number or a date, but never both.”
– Wall St. strategists’ axiom
In fairness to the Wall Street strategist, their optimism in early 2025 was ultimately proven correct, as we closed significantly higher than their early 2025 targets.Timing the market is tough. It’s hard to be bullish when everyone else is bearish, but it’s even more difficult to be bullish and correct when everyone else agrees with you.An easier market forecast in a time like this is that the market will see an increase in volatility. This is Wall Street’s way of saying an increase in the number of drawdowns from market highs.Another outcome, which is already beginning to play out, is that the bull market will continue higher, but there will be significant market rotation.The first trading day of the year was a clear example of the market rotation that has been underway for some time.This type of market action is great news for active swing traders, as it can provide many more opportunities to buy your favorite trends on a pullback. And when pullbacks are created by market rotation, they are a healthy characteristic of durable bull markets.
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Best wishes for your trading,
Geoff Bysshe
President
MarketGaugeEvery week we review the big picture of the market’s technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral. The video analysis dives deeper.
Summary: Overall conditions remain cautiously risk-on despite a roughly 1% pullback, strong foreign equities, resilient breadth, improving risk gauges, leadership from semiconductors, early crypto strength, and favorable January seasonality continue to support the trend—though momentum is clearly waning. Offsetting this, mixed volume, weakening internals led by Nasdaq, a deteriorating new-high/new-low ratio, growth stocks slipping into a warning phase, and unresolved signals in gold and volatility keep the backdrop fragile rather than decisively bullish.
Risk On
Indexes were down on average a bit more than -1%, Three of the four have bull phases with the exception of NASDAQ which is now trading in a warning phase. Momentum is starting to wane on daily charts but still strong on weekly. A weak risk-on rating overall. (+)
Asian foreign equities put in an extremely strong week. (+)
The risk gauges improved slightly to 80%risk on due to weakness in Gold. (+)
The modern family is looking good with Semiconductors putting in a new intraday all-time high and all of the members in bull phases. Momentum is waning a bit. (+)
Foreign equities remain strong with Emerging markets breaking out to a new all-time high. (+)
Use the links below to read:
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Best wishes for your trading,
Keith Schneider
CEO
MarketGauge
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