The markets are getting off to a good start in 2026.

We are only a days into the new year and the S&P 500 is already making new highs.

Many themes are working at the same time. AI, space, rare earths, and defense are all showing strength. It’s been a while since we had this many areas of the market moving higher together.

This could be a foreshadow of what 2026 might look like.

This is exactly what you want to see.

The major indexes are above all the major moving averages. They are trending up and starting to gain momentum.

Every year, there are only a few short windows where real opportunities show up. You can tell when there are tons of potential setups and positions start working almost right away (just like our new position in Rocket Lab, which is up almost 20% in a matter of days). During those times, you need to be focused, prepared, and ready to act. Those windows often decide whether you have an okay year or a phenomenal one.

Now this looks like one of those moments.

How the market starts the year can tell you a lot about how the rest of the year might go.

Over the last 48 years, when the S&P 500 was up after the first 5 trading days, it ended the year higher about 83% of the time. On average, the market gained around 14.2% in those years.

This does not mean it will always happen. Bad news and correction can always happen. But in the past, a strong start has usually meant a good year overall.

And when the S&P 500 is up more than 1% after the first 5 trading days, like it is this year, the odds have been even better. In those cases, the market finished the full year higher more than 87% of the time. The average gain was 15.7%.

Even though January is usually a strong month for the market, things can get more volatile toward the end of the month.

However, if it finishes the entire month in green, it is even better for the markets.

However, if the market finishes the entire month in the green, that is usually an even better and sets a very positive tone for the rest of the year.

January often gets a boost from fresh money coming into the market.

After the holidays, cash from retirement contributions, bonuses, and new portfolio allocations starts moving out of cash and into stocks. So, this is when many institutions put cash back to work, including money raised from tax loss harvesting.

And going into January we’ve seen institutions starting to get more optimistic.

New highs, and especially new all time highs, are one of the most bullish signs in the market.

The S&P 500 just saw the highest number of new 52 week highs since November 2024. Around 12% of stocks in the index are now at 52 week highs. When this has happened in the past, returns 3 months, 6 months, and 1 year later have usually been strong.

About 69% of S&P 500 stocks are now trading above their 50 day moving average. That is the highest level since August.

The Mag 7 could lead the market again in 2026.

These stocks have driven most of the market gains in recent years. In 2025, they made up about 50% of the S&P 500’s returns. In 2024, it was 74%. In 2023, it was 83%.

Lately, they have been falling behind the rest of the market.

It might be time for them to catch-up.

Five of the seven Mag 7 stocks underperformed last year. The only exceptions were Nvidia and Google, which are both key positions in our portfolio.

Outside of those, I think 2026 could be a great year for Amazon. We are likely to see actual breakthroughs in robotics this year, and Amazon is one of the biggest companies that benefits from that.

Amazon’s unparalleled integration of robotics, AI, and logistics automation has made it one of the most robot-driven corporations in the world.

Amazon Robotics now operates more than 1 million robots across fulfillment centers, including the Kiva and Proteus platforms that autonomously handle picking, packing, and material transport. Beyond warehouses, Amazon is expanding into home robotics (Astro) and testing humanoid collaboration pilots for logistics and last-mile delivery.

It is only a matter of time until it employs more robots in than humans.

There are tons of people calling for a crash and an end of this bull market.

But the fundamentals tell a different story. Corporate earnings are strong and still improving.

S&P 500 earnings are expected to grow by about 14% in 2026. That number looks realistic. This is not just hype. Profit margins are also expanding and sitting near cycle highs.

It’s to be bearish, when companies are more profitable than ever.

So far, it’s been mostly big tech companies that are making more money than ever and are near record high margins. Smaller and mid size companies are still below their 2022 highs.

But if they start to catch up, there’s a ton room to grow.

Risk appetite is going up.

More money is flowing into global stock markets. Investors are more willing to take risk. Most people underestimate how long this kind of momentum can last. For risk on assets, this could be a very good environment for a little while.

The IPO market is starting to come back.

More companies are going public, merger activity is picking up, and stock markets are moving higher.

We’ll likely see multiple trillion dollar IPOs are coming in 2026.

There has never been a better lineup of private companies waiting to go public than right now.

For the most part, it’s been very quiet on the IPO front.

Since 2021, there have been very few notable companies going public. Higher interest rates, market volatility, and lower valuations made it hard for IPOs to work. Most companies chose to stay private and wait for better conditions.

But this is changing soon.

Sentiment is improving

For the first time in over a year, AAII Bulls outnumber Bears for 6 consecutive weeks

This occurred after bear markets, with $SPX gaining an average of 17.6% in the next year

So, where might the markets end up in 2026?

A typical down year of about minus 13% would bring the S&P 500 down to around 5950. That would mean a forward P/E of about 17x. To get there, valuations would need to drop around 25%. Today, this is rather unlikely. That would only happen if there is a big exogenous shock.

On the other hand, a strong year could push the index closer to 8000. That would only require a small increase in the forward multiple to around 23x.

Earnings are still the main driver.

As long as profits keep growing and margins keep improving, the outlook for 2026 stays very positive. With markets at all-time highs risk appetite is also rising. Investors are more willing to take risk, and this kind of momentum often lasts longer than most people expect.

But these windows do not last forever. That is why it is important to be prepared. Build your watchlist and be ready to pull the trigger when the time comes. Make sure to check the leading stocks and the thematic portfolios. The number of opportunities has increased massively. And I am currently watching a few very interesting names for new positions. I am going to share them soon.