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The first half of 2026 did what this market has become very good at doing: scare everyone, shake out nervous traders, and then keep climbing.
The S&P 500 gained 9.6%, the Nasdaq rose 12.8%, the Dow added 8.9%, and the Russell 2000 jumped 21.9%. The second quarter delivered most of the fireworks, with the S&P 500 climbing 14.9% and the Nasdaq surging 21.4%.
The market absorbed war headlines, stubborn inflation, high interest rates, and concerns about expensive AI stocks — and still managed to finish the first half with strong gains. The bulls won the first six months, but the fall may prove to be a much tougher test.
Last Fall Broke the Usual Pattern
September has a terrible reputation on Wall Street, but last year it ignored the script. The S&P 500 gained 3.53% in September 2025 and another 2.27% in October, setting eight new closing highs along the way.
November then reminded everyone that markets do not move in straight lines. The S&P 500 dropped 5.7% from its October high as investors questioned valuations, AI spending, debt, and whether future growth could live up to the hype. Buyers eventually returned, and the market recovered almost the entire decline before the month ended.
Historically, September has been the weakest month of the year for the S&P 500, averaging a decline of about 0.8%. October is known less for poor returns and more for volatility, often producing some of the year’s largest swings and highest VIX readings. November has usually been much kinder, averaging a gain of roughly 1.8% since 1970.
Last fall proved that seasonal patterns do not always follow the script. The final numbers looked calm and bullish, but the ride was anything but comfortable.
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This Fall Has More Moving Parts
The bullish case is still alive. Earnings expectations remain strong, AI spending continues to support technology, and the rally has broadened into small caps, financials, and industrials.
The problem is that expectations are already high. Strong earnings may no longer be enough. Companies may need to beat estimates, raise guidance, and prove that massive AI spending is producing real results. A good quarter can still be punished if the outlook disappoints.
The war remains the biggest wild card. A sudden escalation could send oil higher, revive inflation fears, push Treasury yields up, and make the Federal Reserve even less predictable.
Kevin Warsh may not hold the market’s hand or give traders a roadmap before every policy move. The better clues may come from bonds, rates, gold, oil, the dollar, and the way stocks react when the news hits.
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A market that refuses to fall on bad news is still showing strength. A market that begins falling on good news deserves attention.
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A Bull Market Can Still Hurt
The fall does not need a crash to cause damage. A repeat of last November’s 5.7% pullback would be enough to hurt anyone carrying oversized positions or running too low on buying power. Volatility can rise quickly, margin requirements can increase, and trades that looked harmless in July can feel very different in October.
That is why the next six months may be less about finding more trades and more about choosing better ones. The market will probably continue offering opportunities, but it may also offer plenty of traps dressed up as opportunities.
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Maria’s Bottom Line
Always bullish — but not interested in forcing trades.
The portfolio needs room to breathe. Buying-power usage should stay low, and cash should be ready for the days when fear creates better prices.
Missing a mediocre trade is better than getting trapped in one. When fear hits and /NQ or /ES sells off hard, a carefully placed Crazy Ivan can pay off nicely.
Fewer trades. Better prices. More patience.
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