December 28, 2025
Weekly Market Outlook
By Geoff Bysshe
In last week’s Market Outlook, “Unveiling The Market’s 2026 Magic Trick…” we encouraged the use of the powerful method of anticipating the market winners and losers without relying on predictions.
We also shared the table below, which demonstrates how wrong Wall Street’s macroeconomic predictions can be.
How To Profit From Unreliable Market Predictions
Actually, if you use the Calendar Ranges & Signal of The Year tactics that we described in last week’s article, predictions like these can be very helpful (when they are right), because with the Signal of The Year, you’ll know when to enter the predicted trend trade, which predictions are working, and which ones you should exit or avoid.
In this week’s article, we’ll look at a powerful formula or framework for anticipating which trends are likely to breakout or reverse at the Calendar Range inflection points, so you can look at any market prediction and determine your own well-crafted trading plan that will sort out the treasures from the trash.
How To Find The Bulls In Any Market
Over the last 15 years, there have been major changes in the way we trade and invest, such as:
We’re not trading the same type of markets that existed not long ago.
All of the changes above increased the complexity of the factors investors can consider in their decision-making process, and which independently have the potential to drive market behavior.
The result of all the innovation has been analysis paralysis, information overload, and shinny penny syndrome.
The Formula
Fortunately, what hasn’t changed are the factors that drive long-term price appreciation in the stock market: investors’ expectations of future earnings and dividend growth.
If we were describing ice cream as the core factor over the long term, we could now debate which flavor of ice cream is best, but ultimately, the key driver is, analogously, “ice cream.”
We could also debate the factors that will affect ice cream or the expectation for earnings growth, such as the fact that a tall ice cream cone in the sun on a hot summer day has a very different fate than a one-scoop cone in the winter. Likewise, stock prices tend to fare differently in conditions of high valuations, rising interest rates, runaway inflation, etc.
The “formula” is to remain focused on the key inputs to the core long-term driver of prices.
Investor expectations + future earnings and dividend growth = changes in stock prices.
The Problem
Investor expectations are human emotions and, therefore, very difficult to predict with certainty.
The future of anything is also very difficult to predict with certainty.
The Best Solutions
The simplest solutions are usually the best ones when it comes to trading and investing. Additionally, there is more than one solution to success in the market.
Warning: combining multiple successful solutions doesn’t always result in a successful solution!
Keep your solution simple and focus on executing in a way that makes it succeed.
The MarketGauge Opportunity Framework Applied to 2026
One simple yet sophisticated solution for identifying opportunities in any market, and most powerfully in bull markets, is to find trends that have clear correlations with the key inputs of the core long-term driver of prices.
Again…
Investor expectations + future earnings and dividend growth = changes in stock prices.
Here are 5 measures of a stock or a market’s trend as it relates to the formula above. The solution, your opportunity, is to trade or invest in trends where these conditions are getting better or stronger.
Examples of narratives include “earnings are growing”, “revenues are growing”, “the product adoption is viral”, “the company has steady growth in uncertain times”, “the company’s products are going to create huge revenues when they are released”, etc.
Unfortunately, there isn’t one simple indicator for this factor like we have for the other four market conditions. The indicator or condition that you’re looking for in evaluating the narrative is the answer to this question: “Is the narrative getting more popular or more convincing?
In short, you’re looking for the trend in the narrative in the same way you’re looking at the trend in the charts of all the other four indicators.
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Add It Up AND Stay Focused in 2026
Each of the 5 conditions above represents a different gauge of investors' expectations for future earnings and dividend growth.
One of the best formulas or frameworks for defining a bull market is Sir John Templeton’s quote:
“Bull-markets are born on pessimism,
grow on skepticism,
mature on optimism and
die on euphoria.”
The insight in this formula lies in the fact that it’s completely defined by the investor's emotional state, rather than the data-centric metrics most commonly used to guide investors’ decisions.
The biggest cycle of trading or investing opportunities begins when investors don’t want to own a stock, and as a result, the price is “low”. As conditions change that impact potential growth opportunities, a new narrative emerges, investors notice, become more bullish, and act on their changing expectations.
Individual stocks and the market continuously ebb and flow through the cycle phases that Sir John Templeton describes.
As you can see by the table of Wall Street predictions below, we’ll enter 2026, with a market narrative that is clearly bullish regarding expectations for future earnings and dividend growth.
There will always be stories and predictions of market doom, but you’ll be able to navigate the noise and adapt to changing market conditions in a timely way if you make a rational assessment of what the market is doing as measured by the five conditions outlined above, and consider the current environment as defined by Templeton’s framework.
The market environment is currently far from a Templeton pessimistic “low” and arguably not at a “euphoric” high.
If you’d like to be in stocks, sectors, asset classes, and markets with strong trends defined in a much more sophisticated, yet simple, way than just “the price is going up” adopt the framework above.
The Best Trades for 2026
In the current market conditions, trend-following traders and investors should focus on trends with 3 of the 4 technical indicators in bullish territory and, preferably, an improving narrative.
We’ll be covering markets and stocks through this lens here all through 2026.
If you’d like a head start on where to focus to find ideas for 2026…
Download Mish’s 2026 Market Outlook report here
If you'd like help taking advantage of the Calendar Ranges and Signal of the year, contact us.
Happy New Year.
Geoff
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 Every 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, risk-on conditions dominate as broad indexes, sector rotation, market internals, volatility, and global markets all point to strong bullish momentum supported by favorable seasonality. However, mixed volume confirmation, weaker Nasdaq internals, strength in precious metals, and lagging growth momentum introduce caution and keep a small risk-off signal in place.
Risk On
Neutral
Risk Off
Maintain a moderately aggressive risk-on posture, but with selective positioning, tighter risk controls, and awareness of asymmetric downside given mixed volume confirmation, weaker Nasdaq internals, and defensive leadership from precious metals.
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Stay invested and aligned with the prevailing risk-on trend, but trade with confirmation, favor rotation over concentration, and keep risk controls tight until volume and Nasdaq internals validate the next leg higher.
**There will not be a video this week.
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