The five macro trends set to define 2026
Expectations are high, but will the market return to its record high.
The S&P 500 Index closed 0.73% higher on Wednesday, extending its rebound after last week’s Thursday–Friday sell-off. While it remains uncertain whether the market will fully retrace that decline, expectations are very positive today following overnight news about Apple (NASDAQ:AAPL) investments, tariff exemptions for semiconductors, and other factors. The S&P 500 is likely to open 0.6% higher, nearing the 6,400 level.
Investor sentiment has deteriorated, as reflected last the yesterday’s AAII Investor Sentiment Survey, which reported that 34.9% of individual investors are bullish, while 43.2% are bearish.
The S&P 500 has rebounded from last week’s sell-off, as shown on the daily chart.
Nasdaq 100 – Rallying to a New All-Time High?
The Nasdaq 100 gained 1.29% yesterday, and this morning, it’s expected to open 0.7% higher on Apple and AI-related news. Resistance is around the 23,500–23,600 area, with support at 23,300.
While there are no strong bearish signals yet, the recent price action may be forming a potential topping pattern.
Volatility Slowly Declining
Last Friday’s sell-off pushed the VIX (Volatility Index) to 21.90 - its highest level since June 23 - but it has been declining since, reaching a local low of 16.56 yesterday.
Recently, the decline in VIX reflected declining investor fear (declining gold prices indicate the same thing).
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
S&P 500 Futures Contract Breaks Above 6,400 Again
This morning, the S&P 500 futures contract is trading higher, though pulling back slightly from a local high of around 6,427.
Resistance is now at 6,440-6,460, with support at 6,380.
Market Outlook: Rebound Extends, but Bullish Picture Remains Unclear
The S&P 500 is likely to open higher, but some profit-taking cannot be ruled out. Following the rally from early April lows, the market may have entered a period of volatile fluctuations.
Here’s what I think is most likely:
- The S&P 500 is grinding higher, retracing more of its Thursday-Friday sell-off.
- Active trades in XLF (short) and TSLA (long) remain in place.
For individual investors, this environment calls for careful position management. While the market continues to advance, the combination of low volatility, seasonal weakness signals, and stretched valuations suggests that defensive positioning may become increasingly important in the weeks ahead.
The current market conditions highlight the value of having a systematic approach to investing rather than trying to time every market move. Whether you’re using technical systems like the Volatility Breakout System or following seasonal patterns, having a disciplined framework becomes crucial during uncertain times.