2026 Macro Outlook: The Market Is Sending a Warning After a 3-Year Rally w/ Mark Newton
Speakers
Mark Newton
— Managing Director and Head of Technical Strategy at Fundstrat Global Advisors
Summary
Mark Newton, Fundstrat's head of technical strategy, expects 2026 to be a choppy but positive consolidation year for equities, with a likely correction into spring or summer and a stronger rally after the midterms. He favors a balanced allocation, likes industrials, financials, regional banks, utilities, energy, precious metals, Latin America, and Ethereum, while expecting tech to consolidate and Bitcoin to offer lower buy points. He outlines key levels for Bitcoin, crude oil, gold, the dollar, and USD/JPY.
- Mark Newton forecasts a choppy but positive 2026 with midterm-election volatility and a second-half recovery.
- He sees tech due for a snapback and then consolidation, with AI bubble fears overblown.
- He favors industrials, transportation, financials, regional banks, utilities, and energy for 2026.
- He is a dip-buyer in gold and silver, preferring silver for its 40-year breakout.
- He expects crude oil to bottom under $50 by February and prefers energy as a mean-reversion trade.
- He expects crypto weakness into Q1/Q2, with Bitcoin buy zones at 71k and 58-63k, and prefers Ethereum over Bitcoin.
- He sees dollar weakness near-term, a mid-year bounce, and renewed weakness later; USD/JPY may fall to 147-148 then rebound.
- He likes Latin America, South Korea, and China, with emerging markets potentially stronger in 2027.
Ideas
Own Treasuries as yields move lower.
Newton says investors should own some Treasuries as part of a balanced portfolio. He also expects Treasury yields and the dollar to move lower over the next couple of months, supporting Treasuries near term.
Choppy but positive 2026; buy dips.
Newton expects 2026 to be a choppy but positive year of consolidation for US equities after a three-year rally, not a collapse. He sees a bounce into late February or early March, then a correction or consolidation, and eventually stabilization and a stronger rally after the midterm elections. He says he likes being long the market while no long-term trend breaks have occurred.
Bounce first, then tech consolidation; be selective.
Newton expects at least one more snapback rally in technology before large-cap tech undergoes a correction or consolidation from overbought and overvalued levels. He thinks AI bubble worries are overblown, but tech is crowded and should be selective; the opportunity shifts toward AI beneficiaries rather than AI creators, and a balanced portfolio is preferable to very tech-heavy QQQ or S&P exposure.
Small caps benefit from lower rates.
Newton notes small caps, including IWM, have broken out. He also says falling interest rates are a huge benefit to small-cap companies with high debt-to-capitalization ratios that need to refinance, supporting the small-cap setup.
Industrials leadership at two-decade relative highs.
Newton likes the price action in industrials, noting the sector is at two-decade relative highs versus the S&P. He views this as evidence against a late-cycle thesis and expects continued strength.
Transportation breakout supports late-cycle bullish view.
Newton sees a near breakout in transportation, with rails, freight, and airlines hitting new highs. He finds this very interesting and says it argues against a late-cycle market and could help keep equities from selling off sharply next year.
Financials set for nice 2026 moves.
Newton likes financials for 2026 after they underperformed most of 2025 following April. He sees them setting up for nice moves as rates come down and regional banks improve.
Regional banks benefit from falling rates.
Newton expects regional banks to kick into gear as interest rates come down. He says lower rates benefit small-cap companies with high debt-to-capitalization ratios that need to refinance, and he sees regional banks and other financials setting up for strong moves next year.
Utilities offer defense and AI power demand.
Newton's favored defensive sector is utilities. He likes them for defense and yield, and he notes that many power-generation companies are beneficiaries of AI and should help fuel the theme for years.
Energy is largest 2026 mean-reversion trade.
Newton likes energy as a 2026 mean-reversion trade even though crude has been plummeting. He expects energy to finish near lows and have a rough start to 2026, but thinks buying energy from roughly February into August will be a very good trade as crude ends its three-year bear run.
Crude bottoms under $50, then rallies.
Newton expects crude oil to get under $50 per barrel, albeit briefly, between now and February. He sees that weakness as unsustainable and expects it to mark a bottom, with crude ending its three-year bear run and creating an opportunity in energy.
Bitcoin waits for lower buy levels.
Newton sees a short-term crypto low approaching and a December bounce, but thinks the bounce will lack power and crypto likely turns down again in early 2026. He does not see a meaningful long-term low until Q1 or Q2 2026, with Bitcoin downside targets near 71,000 and then 58,000-63,000, where he would deploy capital for a buy-and-hold approach through 2028.
Prefer Ethereum over Bitcoin for 2028.
Newton says Ethereum stands out and prefers owning Ethereum over Bitcoin. He cites the merger of crypto with AI and tokenization as important, and says he would own both Bitcoin and Ethereum between now and 2028 if possible.
Buy gold dips; bull run continues.
Newton is a big buyer of pullbacks in precious metals. He thinks the gold bull run can continue due to central-bank buying, potential Fed independence concerns, fiscal unease, and high interest payments. He expects any pullback in gold next year to be a good buying opportunity, though he warns a sharp rise in long-end rates could hurt metals.
Silver breaks 40-year base; favorite metal.
Newton likes silver a lot more than gold. He notes silver recently broke out of its largest base since the 1979-1980 Hunt Brothers squeeze, a 40-year technical base, which makes him very optimistic on owning silver next year and on any weakness.
Dollar choppy: down, then up, then down.
Newton expects the dollar to move lower over the next couple of months, then rally between February and the fall as the US growth outlook improves relative to Europe, and then roll over again to end 2026 and into 2027. He does not embrace the 'sell America' label but believes the dollar eventually goes lower, which could fuel emerging markets.
USD/JPY drops then rallies next year.
Newton expects USD/JPY to fall to around 147-148 as the BOJ hikes and the yen strengthens, then sees a big period of yen weakness that sends dollar-yen back to the highs into next year.
Japanese stocks need consolidation during yen strength.
Newton says the Japanese stock market is similar to the US and both are in need of a period of consolidation. He expects that consolidation to occur during a period of yen strength.
Emerging markets limited upside, bigger 2027.
Newton thinks the dollar eventually rolling over can fuel the EM trade, but he sees EM as having only two or three dollars of upside before a pullback as the dollar strengthens. He expects the big year for EM to be 2027 as the dollar weakens strongly.
Latin America breaks 20-year downtrends.
Newton loves the Latam space in general. He notes that Mexico, Brazil, and Argentina are attractive, and that EWZ and ILF have broken out of lengthy almost 20-year downtrends even while crude has been heading lower, which he finds very interesting.
Like South Korea, limited detail.
Newton says he likes South Korea, naming it as an attractive emerging market.
China outperforms as dollar weakens.
Newton likes China to show some outperformance next year. He notes China had a good move off the lows and has been choppy, with the key being when the dollar rolls back over.
Beaten-up energy pipelines offer yield.
As part of his energy allocation, Newton likes areas of playing the pipelines within energy, especially beaten-up parts of the sector that pay decent yields.
Down-and-out pharma fits balanced portfolio.
In his balanced-portfolio discussion, Newton favors down-and-out pharmaceutical stocks as part of a diversified 2026 allocation.
Up Next
This Milk Road Macro video, published January 01, 2026, features Mark Newton discussing TLT, SPY, XLK, QQQ, IWM, XLI, JETS, XLF, KRE, UTILITIES, XLE, WTI, BTC, ETH, GLD, SILVER, DXY, USD/JPY, EWJ, EEM, ILF, EWZ, EWY, FXI, AMLP, XLV. 24 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mark Newton · Tickers: TLT, SPY, XLK, QQQ, IWM, XLI, JETS, XLF, KRE, UTILITIES, XLE, WTI, BTC, ETH, GLD, SILVER, DXY, USD/JPY, EWJ, EEM, ILF, EWZ, EWY, FXI, AMLP, XLV