Weekly Update: 8 Reasons Stocks Will Keep Rising
Good evening, and welcome to this week’s edition of Stealth Trades!
The stock market is already up big from the April lows. But in all likelihood, this is just the beginning.
Here are 5 reasons I believe stocks will continue to advance in 2026:
#1 – The biggest technological advancement of our lifetime
Artificial intelligence is rapidly increasing efficiency and driving down costs. We haven’t seen a boom like this since the internet in the 1990s. And the Nasdaq index surged 271% in the final 16 months of that bull market.
#2 – Ongoing Fed rate cuts into a stock market at all-time highs
This has happened 23 times in the last fifty years. In every case, stocks were higher a year later. Check out the data below.
#3 – Trump’s appointment of a new Federal Reserve Chairman
Powell’s term ends in May. Don’t let the door hit you on the way out, JPow. President Trump has picked his replacement and will announce it by next month.
The consensus is that he will tap Kevin Hassett – a Trump ally who believes in aggressively cutting interest rates and lower corporate taxes. Both actions lead to higher stock prices.
#4 – $700 billion in annual CapEx from tech companies
Thanks to the AI arms race, big tech is spending 700 billion a year on chips, data centers and other infrastructure. All of that money is leaving their company treasuries and entering the economy.
#5 – The end of Quantitative Tightening
As of December 1st, the Federal Reserve ended its QT program. They have been reducing their balance sheet for over a year which added selling pressure to the market. That has now come to an end.
#6 – The most market-conscious US President ever
Love him or hate him, Trump views the stock market as his presidential scoreboard. He wants to see GDP growth, foreign investments, and record profits reflected in the market indexes. He’s even said he will fight to keep markets at all-time highs.
#7 – $2 trillion in annual deficit spending
I hate deficits. The fact that our government takes a third of our income and still can’t make ends meet is disgusting. No sitting member of Congress who votes to spend more than we take in should be allowed to run for re-election.
But nobody asks me. So, this is the game board we must play on. And the facts are simple…
The deficit will continue to widen. The debt will keep going up. And Washington will print money to fill the gap like it always has. Inflation will get worse, and it will push stock prices up with it.
#8 – 13% year-over-year earnings growth in the S&P 500
Historically, earnings grow at about 9% a year. That is the long-term average for the S&P 500 since 1957. This year they grew at 13%. That’s almost 50% above the norm. And earnings drive stock prices.
I don’t see how anyone could be bearish and think the market will crash under these conditions.
Are valuations stretched? Sure.
Will some of today’s high-flying AI stocks come crashing one day? Absolutely.
But markets operate on liquidity. If there is more money going in than out, prices rise. And this is exactly the scenario we are in today.
The bull market continues.
Best wishes for your trading,
