In today’s episode, Tyler Herriage breaks down the latest market action as we head into the end of 2025 and look ahead to what’s shaping up to be an exciting 2026. Despite continued market weakness this week, Tyler points out several bullish factors on the horizon—including the much-anticipated Santa Claus rally, the January trifecta, and a host of fundamental drivers

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Tyler Herriage here with you for today’s VRA Investing podcast. Hope you all had a fantastic day out there today. Unfortunately for our markets, the weakness did continue today. But stay tuned, we see some very bullish factors right on the horizon for this market here, and we’ll cover many of those here today as we head in to 2026. So we’ll cover a little bit of what we expect later this month.

Really not a whole lot of trading sessions left for this market as this is the final full trading week for our major indexes. We either have holidays or half days coming up for the next couple of weeks. So we’ll also get into our 2026 forecast, which if you’ve been tuning into this week’s podcast, you know Kip has covered a lot of as well. I have some great facts to bring you here in addition to those on today’s podcast. So looking forward to diving into all of those today, including a late earnings report here for Q3 that we just got after the close today. Stay tuned. You’ll want to hear it as well. But first here before we dive in, President Trump announced today that he will be addressing the Nation tonight at 9pm Eastern Time.

[00:01:36]:
And that, of course, has gotten all kinds of speculation about what that will be. You know, some speculation saying, oh, just going to be a normal Trump press conference, some on the anti Trump side saying it’s going to be more like a campaign speech kind of event. Well, some others are saying it could be an announcement of war with Venezuela. That’s the, you know, kind of the most out there one that I’ve heard so far. That was Tucker Carlson who said that earlier today. That’s really been making the rounds. You know, I won’t dive too much into that here, but Tucker has, you know, not been very good with the initial takes off of a lot of things like this, whether it was Covid or previous wars for that matter. If you’ve been watching them for a while, you know what I’m talking about.

So we certainly wouldn’t want to see that being the case. And as much as I hate to say it, you know, after a few days of weakness, kind of the old war adage as it goes, when bullets fly, stocks are a buy. So again, hopefully that’s not the case here, but doesn’t mean that it’s something bearish for our markets if we if it is something like that. So like I said, I won’t spend too much Time on it here today. So let’s go ahead and jump right in because I really wanted to cover what we see for the second half of this month that we’ve just entered and into 2026 as well. You know, we’ve talked about this all month really, that December can oftentimes see a good beginning of the month, a mid month pause. And we’ve just gotten over the hump here. Now, according to our market action today, we haven’t really gotten there yet, but this is right around the time frame where stocks tend to rally going into year end in anticipation of the Santa Claus rally.

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We talk about this one here every year. And then of course, we also see what we get at the end of every quarter and at the end of every month as well. But now, especially with a new year, we’re past, you know, the tax loss selling timeframe or most of it. Obviously you still can, but most of it’s done at the beginning of this month. And then you get new month fund flows, new quarter fund flows as well as we head in to the new year here. So you see a lot of front running of these kinds of events. And we wouldn’t be surprised to see that take place for the Santa Claus rally as well, which is, you know, a lot of people talk about it just being December as a whole, the Santa Claus rally, but specifically as was developed by the Stock Traders Almanac, which I have a great chart from here to share with you today as well is the final five trading days of the year and the first two trading days of the new year. So going back to 1969, this time frame is well above average, higher.

I forget the exact number off the top of my head, but the average returns for this short time frame, seven trading sessions, is 1.3%. So we really want to see it take place this year as every year, but because it bodes well for what’s coming the following year. So number one, that’s number one there. That does bode well for 2026 if we can get a positive Santa Claus rally. But we’re ending entering, you have a crucial time frame of what’s called the January trifecta. Again, Stock Traders Almanac. You’ve heard Kip and I both talk about them here a lot. Kind of the original seasonality technicians, you know, looking back on previous data to see what it can tell us about what usually happens.

Right. Of course, past performance doesn’t guarantee future results. But many times, as they say about history, it may not be what’s the what’s the term, it may not be exact, but it does rhyme. I know that’s way off, but you get my point here. Typically, they are pretty similar. So what we’ll be watching for here over the next month and a half is, number one, the positive Santa Claus rally. Number two, what they call the January barometer. As goes January, so goes the year from there.

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And then the first five days of January, if you can get all three of those positive for the market, that is what is known as the January 20trifecta. As when you get all three of those over history, the S&P 500 has been higher one year later, 90% of the time. A very reliable indicator from that point of view, with average gains of 17.7%. So with numbers like that, of course we want to see those kinds of rallies into year end and into the new year. But for all the naysayers out there who, when these things don’t happen, love to, to shout that the sky is falling, the perma bears out there, you know, it’s not definitive that even when you don’t get all three of them, the market is still higher roughly 60% of the time, one year later. So, again, not a definitive, bearish outcome, if you don’t see it. But as we look into 2026, we’re not just looking at these technical factors. There are a number of fundamental factors that are making their way into this market right now that are just.

I mean, some of these are pretty incredible, right? Some of these haven’t even been felt by the market yet. So we’ll dive into some of those fundamental factors here. But we do, you know, just to, just to go right into it, we do remain bullish in into 2026, despite the fact, one more technical fact here, the second year of a presidency is typically not too good for the market. Now, there are a number of reasons for that. You know, every year is different as well. You can’t say, oh definitively this. The second year of a presidency is negative. Well, the sixth year of a presidency is typically positive.

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Right? So this is term number two for Trump, technically year number six. So a few reasons, you know, whether that’s policy, that in the first two years of a presidency, the president tries to get as much policy passed as possible, specifically the unfavorable types of policies, because most presidents, they lose the majority in midterm elections, whether you’re Republican or Democrat. That typically is the case that the incumbent party loses seats in the House and in the Senate during the midterms. Doesn’t always happen, but can very often happen that way. So they try to get the unfavorable policies passed which hit the market. You know, so far, we’ve gotten some pretty good stuff done. Not even a full year into Trump’s presidency, they’ve tra. They passed the one big beautiful bill, which.

I’ll get to some breakdown of that here in a minute, and just how bullish those factors are for the market. But Trump and his team know Trump, and, you know, we love to talk about Treasury Secretary Scott Bessant because of the impact the treasury can have. And then of course, the Federal Reserve as well. They know that this is an important midterm here. They certainly want to see Republicans do well and want to give them the best opportunity to do well in a higher stock market. Certainly bodes well for their chances if the market’s down considerably. People don’t go into elections with very good sentiment. Right.

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So higher stock market can certainly lead to more votes. You know, whether that’s right or wrong, we can have another discussion about that. But it’s certainly is the case. So on the note, though, of this being the second year of a presidency, which is historically not a great year, it’s also the fourth year of this bull market. And fourth years of bull markets typically outperform as well. On average, the historical gains for the fourth year of a bull market between 12.7 and 12.88% on average. You know, it’s hard to believe, really, that we’re entering into year four of this bull market, which we called to the day. We called the 2022 bear market lows that October to the day.

And since then, you know, it’s been an incredible run for the market. But for all of the calls for this being a bubble, I’ll go ahead and share this chart a little early here. You know, the AI bubble that everybody loves to talk about, look how much this was searched here in Google. I mean, wow, obviously you’re not going to get AI bubble search before that, but that’s a massive increase there in searches for AI bubble. It was the number one question that we’ve gotten for months, really. And we’ve got everyone talking about it. It typically doesn’t take place. You know, everyone was calling us, telling us that they had sold all of their stocks.

Again, those aren’t the calls that we get when you’re in the middle of a bubble. Typically, we get the calls that are saying, hey, I just bought this stock. What do you think? Not even asking us what stocks, we like saying I already bought this. So we’re getting the opposite of that now. Hey, I just sold everything. Is that right? Did I make a good call? Those aren’t the kind of calls that we get at the end of a bull market. And if this was a bubble, this is a fact that we’ve stated here many times. Currently the Nasdaq is up roughly 125% since the bear market lows.

[00:11:54]:
That’s about on average for what you see in a typical, you know, run of the mill bull market, not in a bubble kind of move. From 1995 to 2000, the NASDAQ rallied 580%. Those are the kind of bubble like moves that you see at major market tops. And again at 125, those are great gains in roughly, you know, three and a half going on four years now. But those aren’t bubble kind of tops. So no, we don’t think that we’re looking at the popping of the AI bubble here. We think we’re looking at really early innings still of what will likely be a decade long bull market. Now, from 1995 to 2000 you get multiple pullbacks of 10% plus, including a technical bear market during that timeframe, which was a 20% plus pullback.

We had one of those basically earlier this year on Trump tariff mania, you know, but it didn’t totally disrupt this market. We saw the V shaped recovery and back to all time highs within just a few months. So those moves always take place. They’re pretty rare. You know, even a 10% correction only happens about once every 18 months. So we don’t see anything like that in our view as on the immediate horizon here. But again, we’re not just saying this on a whim. That’s not one the stats I just mentioned, nothing like a bull market kind of move.

[00:13:24]:
But we think 2026 is when the innovation revolution will really kick in to high gear. And now I’ll get to some of the fundamental reasons I mentioned a second ago. I’ve stayed on the technicals, but I will get to that here in just a second. But just a few reasons for that off the top of the head, why 2026 could be again the kickoff of this innovation revolution. Tesla, as you know, that we love here the plans to really announce full autonomous, not just full self driving where you have to monitor it, but autonomous driving. They just rolled out the robo cab driverless here in Austin, Texas. And we can dive into some of the regulatory reasons why this is so different from what we’ve Seen from Waymo and their LIDAR technology where they have to go city by city by city and get approvals and test out their products before they can even get to the driverless cars. What’s different about Tesla is it seems that they’ve solved the vision problem.

They don’t use lidar. So these are cameras, which means that they’re not just following a pre planned path like Waymo has an area in the city of Austin, they can’t get out of that area. Tesla has been has real world hours all over and with millions more cars on the road than Waymox, they have way more data as well. Tesla is the real world leader in AI data, so that’s one factor. And overall AI will continue to improve, continue to find new real world cases, whether that’s robotics and manufacturing, robotics at home with Optimus. Right. All kinds of AI factors that are really going to come to life. Some of these will touch more in the coming weeks on, but mergers and acquisitions, we expect to heat up in 2026 as well.

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You’ve already seen some big deals announced, really outside of the Netflix and Warner Brothers move, some of these other M and A deals in the energy space etc have kind of flown under the radar. We’ll start to get some massive M&As that might surprise a lot of people. And I’ll go ahead and jump ahead to that one really quick here. A lot of that will be thanks to Trump’s deregulation. New leader at the FTC as well. Should speed up the timeline for these approvals. Then the IPO market, we got the SpaceX announcement that will likely come in 2026 as an IPO as well. I mean a trillion and a half dollar ipo.

So we look for the IPO market to start to heat up and in 2026. Then let’s dive into some of the fundamentals here. On the economic side, we expect 5% plus for GDP prints quarterly in 2026 to start taking place likely in Q1 2026. On the energy side, Trump’s deregulation has already made us once again energy independent. Here in the US We’ve seen oil prices in gas prices drop drastically. We expect energy infrastructure to continue to be built as well and further bringing down energy costs. So an energy revolution, you know, on top of, you know, solar, forget about wind, but solar and battery is along with nuclear and then, you know, just getting rid of these hamstringing regulations for natural gas, for oil. And what do you think lower energy prices does for inflation right? We’ve already said inflation is a rear view mirror issue.

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That’s been our call for some time. We expect inflation to continue to come down as well, which means lower rates, the Federal Reserve getting room to cut rates. We’ve already seen a weakening in the job market. We’re not looking at a jobs recession in our view, but we have seen a weakening. And this lower inflation would give the Fed more room to cut rates. So we’ll get a new fed chair in 2026. You know, still up in the air on who that will be, but we’ve also just started QE again. You know, they may not call it qe, but it just began this month.

These things take time to be felt by the market, can take place over, you know, six months to a year before the market really starts to feel those impacts. You know, most importantly here though, overall, Trump’s pro growth policies, he hadn’t even been in office a year yet. A lot of these policies haven’t even started to kick in, you know, the effects of the one big beautiful bill and what that will mean really rolling out in 2026, tax benefits, tax cuts, no tax on tips, no tax on overtime. Those kinds of things are, are, will, you know, increase consumer sentiment, increase consumer spending. And then of course the write offs are going to be huge as well. Whether it’s for energy infrastructure or for new businesses as a whole should spur a whole new wave of investments beginning really next year in 2026. As, as well. Then to again the deregulation side, remember Trump’s 10 to 1 deregulation mandate repeal you in order to pass a new regulation, you have to repeal 10 previous regulations.

[00:19:04]:
Again, you know, streamlining the approvals process, whether that’s energy, infrastructure, M and A, all kinds of things. And you know, not to go back to the potential for war with Venezuela, which course you’d hate to see, but this was already planned. Defense and military spending will also increase, which does help the market as well. Then we’ll go to the sentiment side of things. Here it is the 250th anniversary of America’s founding, which going back to the campaign trail, Trump talked about this a lot, that it was going to be a party in 2026 with celebrations all over the country. You know that, that he wants to see the stock market higher as well. He can talk about not watching the markets. We know that he watches the markets like a hawk.

So he said that 2026 was going to be incredible with celebrations taking place all over the country. It should be a Very fun year. Then we also have the World cup kicking off and taking place a large part in North America and in the US Primarily. So should be very exciting. And then one more factor here from Treasury Secretary Scott Bessant, who said and think he got this just right. I’ll go ahead and quote this. We wrote it to our members this morning. Kip did.

Besson said we should, we should think that 2025 was setting the table right. It’s only 11 months that Trump got in 2025 after being inaugurated in January. 2026 is going to be a bountiful year. Love that term. There are going to be substantial refunds to working American households in the first quarter. Tax cuts, they will change their withholding. They will get an increase in real incomes. So I’m very optimistic for working Americans, for job growth and for capital formation.

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2026 is going to be a great year. We know that it has mostly been the first America, which are commonly referred to as the first America, you know, really hasn’t cut their spending back at all. These people are already wealthy. High interest rates don’t affect them. Is the second America that’s hurt the most by the Fed’s policies. That’s why we’ve said from the beginning that Jay Powell is so out of touch. So to hear, you know, the Treasury Secretary talking about how bullish he is and how optimistic he is for actual regular American households, that is good to hear. You know, for all of the virtue signaling from the Biden administration, did they ever really seem that in touch with the working class? Never.

Right. That’s why the working class predominantly voted for Trump while the so called elites, you know, the Ivy League educated, went for Biden. You know, that those are the typical liberals now, not the party of working class people. So again, we remain incredibly bullish on 2026 and we think that the second half of this month should be pretty good as well. Now to today’s market action here. You know, we’ve seen continued weakness from bitcoin, which, you know, for years was often a leading factor for the market. Bitcoin was going up, the market followed. Bitcoin is going down, the market followed.

We talk about it here with the semis. You want to see tech leading and semis leading tech. Neither one of those things how we’ve gotten in the last four or five sessions in bitcoin, longer, obviously. So as we enter the seasonally bullish time frame, we have to remember it’s also a period of low liquidity. A lot of people are out of the office this time of year. So the Bears did want to hit the market. You know, this would be the time to do it. So we’re here every day watching the market so you don’t have to and believe it.

[00:23:00]:
Believe me, we’re watching it like a hawk right now to get some big trades on into year end and into the bullishness we talked about in 2026. But until, you know, the semis and bitcoin make the turn, we see no reason to rush it here. Again, that’s the very short term that I’m talking about. Over the medium to long term, we, I don’t know if we could be really more bullish here. So let’s touch on the markets here for the day. We had the Dow Jones leading the way, if you want to call it that down, let’s see just under half a percent on the day to 47,885 followed there believe small caps. My screen’s refreshed here. Getting a little bit of a late start.

Small caps down just over 1%. The S&P 500 down 1.15% on the day. And again, as I mentioned earlier, not what you want to see. The NASDAQ leading the way lower down 1.8% here. I’ll get to that here in just a second. But I do have one more chart that I want to share for you here as well. You know, that kind of covers this mid December lull that we’re talking about here and specifically for small caps. You’ve heard Kip and I talk about the January effect where small caps typically outperform large caps during January.

[00:24:25]:
Now remember, small caps also typically outperform large caps after the Fed cuts rates. So this is a bit of a perfect storm here for the small caps to see. You know, some really good returns for us here. One, excuse me, they typically outperform large caps by 3 to 5%. Excuse me, typically outperform large cast by 3 to 5% after a rate cut. And they typically outperform in January and year end as, as well as you can tell here, this was, you know, the December lull that I’m talking about just about midway through, towards the end. And then look at that outperformance into the first three months of the year and all the way into sell in May and go away. Actually that’s partially because small caps do get hit the most with the year end tax loss selling.

So as I mentioned earlier, we expect some massive fund flows into the second half of this month and especially end into 2026. But typically here, as you can tell, it doesn’t start in 2026, it starts earlier here. So a lot of people like to get a head start. That’s why I’m saying we’re watching the markets like a hawk. We certainly want to be in on that head start. This is from Sock Traders Almanac as I mentioned earlier here. All right, so I do want to go back here to the semis because we had a big earnings report on the day to day. So the semis led the Nasdaq lower down 3.6%.

[00:26:02]:
Again, not what you want to see there, but quickly approaching oversold conditions on stochastics that Kip talked about here as well and just how reliable they’ve been to trade off of recently. Well today we had a semiconductor maker, actually designer and maker, one of the few fabs that we do have, fabricators of semiconductors, a stock that we don’t talk much about here but it’s the fourth largest holding in smh, the semiconductor etf and that is Micron. Again actually a chip maker, not just a designer. Now none of their fabs are currently in the US I’m not sure if they are working on some right now. They are broad. Oh sorry. They do have some in the U.S. i think they’re for some of their older model of chips though.

So let’s see if we can get some of those updated manufacturing plans over here to the US as well. But the company is a pretty cool one. Founded in Idaho, American made company got some of their first funding from a predominant potato farmer in Idaho. And again, I won’t dive into the full story here today, but I was reading about it fairly recently in a book called Chip wars which if you’re interested in the semiconductor space, I highly recommend that book, a very interesting one. But onto their earnings today came in crushed estimates. So we’ll cover estimates here first. Coming in with the earnings per share of 478beating estimates by 21%. That’s a big beat over what the estimates were.

[00:27:41]:
You know, oftentimes the estimates are wrong. But that’s a big wrong one there from the analysts, revenue beating by 6% as well. Now those numbers alone sound good, but check this out. Year over year, revenue up 57%. Earnings per share up 167% year over year. The stock is now up 7 and a half percent in after hours trading. So you know what we were waiting for in the semis that might have just taken place today. Again, the fourth largest holding in Smh.

So should be if those gains can hold a good day tomorrow. One useful factor about sell offs like this, I mean remember we, we’ve just recently seen all, all time highs, all time closing high in the S P500 last week. Not quite the all time intraday high. You know, it does seem like I’ve shared this one on nearly every podcast I’ve done recently. But I gotta do it here again because we had just gotten into neutral territory. Look at that. Maybe a couple of sessions and closed in neutral territory. Now we’re back two, four fear mode here and I got to talk about it here again because these, this is the kind of action you see when you want to be buying the dip.

[00:29:04]:
Not at a major market top. When you’re seeing a major market top and you have these pullbacks, you’ll see a pullback of even 5 to 8% and you’ll see this remaining in greed or even extreme greed in some cases for the fear and greed index. It just simply isn’t what we’re seeing right now. And I will say as well get AII back this week, would not be surprised to see a big drop in bulls after this kind of action because we have seen an increase in aii. Let me just refresh myself on those numbers here because we’ll get this one in early tomorrow morning late tonight. You know, bears about in the same scenario here still, you know, pretty high number of bears but back to back weeks of 44% bulls, 30% bears. Wouldn’t be surprised to see a big drop there. And even then that’s not excessive bullishness that we’re seeing there that we’re getting back to one more factor.

I do want to run a quick final refresh on my screens here of I mean yes, the put call ratio. You hear us talk about this one a lot as well. The, the average for the put call ratio is a 0.7. Anything below that is seen as really extreme bullishness and anything over A1 is seen as really extreme bearishness. Well, today we’re pretty close to, you know, open at a 94, closed at a 94. So that is heavy bearishness on the day to day from that indicator as well. Now go ahead and start to wrap this up for you here today as our internals on the day did come back negative. But I gotta say, compared to what we were seeing just a few weeks ago, on some days where the market was even higher.

[00:30:51]:
Okay. And then on days where you saw a sell off like today, the internals Were just awful. Not great numbers here today obviously, but could have been a lot worse on a day where the markets fall finished at their lows of the day on the NYSE just barely negative, you know, not nothing like a 2 to 1 beat. Now on the NASDAQ was roughly a 2 to 1 beat. They’re a little over that. But again we saw some two and a half, almost three to one beats in many of these indicators. Just a few weeks ago, 52e highs lows actually managed to come in positive on the NYSE is a bit of a lagging indicator. But hey will take it on the Nasdaq did come in negative then once again on the NYSE here, you know, fairly flat for a day like today.

There was more declining volume than advancing, but again no massive beats. And even on the Nasdaq couldn’t get to a 2 to 1 beat. No 70, 75, 80% downside volume kind of day today. So hey, again, not exactly what you want to see, but we’ll take it on a day like today again with the market closing at its near its lows of the day. All right, looking at our sectors now on the day today we had four sectors still managed to finish higher on the day today. We were led by energy stocks which even, you know, despite the sell off in oil, energy stocks have not been performing as poorly as you might expect. Much like you want to see the semis leading tech, it’s good to see energy stocks leading the commodity as well. After that we had consumer staples, materials and real estate all positive on the day.

[00:32:39]:
Our laggards on the day, as you might expect, tech stocks led lower, followed by communication services, really a proxy for tech, followed by industrials and consumer staples. One other chart I want to run here before I move on even one more. Sorry, just don’t want to miss this. Something that could be big because we’ve seen a sell off in the dollar. I want to see what it did today. You know, really not a whole lot to report about there, but both the dollar and yields while they have, you know, yields have bounced a little bit barely. We’re still just barely above before. Both of these have seen a significant drop from Trump’s inauguration, which if you tuned in to some of our podcasts earlier this year, that was our call for the year.

So another one there that we got right, just like a repeat of what we saw in Trump’s first term in 2017 after he was inaugurated. Yields straight down after that, dollar straight down after that, which is exactly the economic policy that him and Treasury Secretary Scott Bessant are going for. We expect more of it, likely for 2026. All right. Finally here for today, we’ll begin to wrap up our VRA commodity watch where we had some more good action here from commodities. One really good piece of action that I know our precious metals lovers will really enjoy here. Gold now at 4, $4,371 an ounce. That’s not far away from the futures all time high there at all.

[00:34:20]:
Silver on the other hand, did hit an all time high today, up over 5% now trading at 66.46 an ounce. Copper I believe this is another multi month high here. I’ll check that one out for you. Not quite. Not quite right. In the range of its highest level since late June at $5 and 42 cents a pound. Then oil now at $56.76 a barrel. Then on to cryptocurrency, specifically bitcoin, which I mentioned earlier has not been performing late.

We want to see it start to to really kick into high gear. Kip covered some of this talking about strategy earlier this week as well. Bitcoin now at 86,000, almost flat. Almost exactly $86,000 of bitcoin, folks. That is all that we have time for here today. Please be sure to subscribe to receive our VRA podcast every day at the Market Close. You can sign up@vra letter.com, click the link at the top and make sure you subscribe to receive our VRA podcast every day in your inbox at the market Close. While you’re there, we hope you’ll join us.

So thanks again for tuning in. Until next time. We’ll see you back here tomorrow for the close.