Just 2½ months left in the year. At present, the S&P is up 11.9% YTD, with the Nasdaq up 12.5%.
But I’m expecting a lot more upside to go.
For one, Q4 has just begun. And historically, the fourth quarter is the best quarter of the year. Since 1950, the S&P has gone up 79% of the time, with an average gain of 4.1%.
This year, however, has the potential to be much larger.
I should also mention that October is typically the best month for stocks in midterm years, which we are in. The gain averages 3.0%. And November is close behind with 2.7%. And both have win ratios of greater than 70%, with October up 73.7% of the time and November up 78.9% of the time.
But there’s a lot more going for the market than just the high-probability seasonal tendencies. That includes the soaring earnings outlook. (More on that in a bit.)
For those who wished they would have taken better advantage of this year’s rally, the good news is that it looks like the next few months could be the best few months of the entire year.
But before I get into the myriad of reasons why I think the market is just too strong to hold back right now, let me address some of the recent headlines.
The Fed
After the Fed’s quarter-point rate hike last month (the first one in 3 years), stocks rallied on the news. In fact, both the S&P and Nasdaq made new all-time highs shortly thereafter. (Recent pullback notwithstanding.)
While the Fed penciled in one more rate hike by year’s end, it’s not likely to come when the Fed meets again later this month (10/28). Plus, with the midterms just a few weeks away, that decision is expected to be punted to the following meeting on 12/9.
Inflation
The most recent CPI and PPI inflation reports showed both headline and core rates ticking back up. A bit of a surprise as that was in contrast with the latest Personal Consumption Expenditures (PCI) index (the Fed’s preferred inflation gauge), which showed inflation easing. It was also in contrast to previous CPI and PPI reports, which have come in better-than-expected. Nonetheless, that was the latest read.
Much of the increase can be attributed to higher oil prices. But that might be ready to turn the corner. Either way, we’ll get four more inflation reports, and two more employment reports before the December Fed meeting.
Crude Oil
Tensions in the Middle East continue.
But Middle East crude exports have risen to 16.3M barrels per day, which is the highest since the war began.
That’s approximately 80% of pre-war levels. To be clear, Hormuz volume is only at 40% of pre-war levels. And that’s with Iran exports effectively at zero. But other Middle East routes used by Saudia Arabia, the UAE and Oman, to name a few, have increased significantly, putting combined shipments at just 20% below the pre-war baseline.
Additionally, the G7 announced they would be releasing as much as 100 million barrels of diesel fuel and crude oil over the course of four months.
All of the above should help cap oil. Ease inflation. And help put a lid on rates.
Treasury Yields
There’s been much ado about rising Treasury yields. But there needn’t be.
With the Fed Funds Rate (FFR) at 3.88% midpoint, and the 10-yr yield at 5.10%, the spread is 122 basis points.
Historically, over the past 40 years (1985-2025), the spread between the FFR and the 10-yr, has been 100 to 150 bps, with the median at 120.
So, there’s nothing ominous about the recent rise in yields. It’s right in line with the historical norm, and appears to be a simple reversion to the long-run median spread of 120 bps.
Now, here’s why you should get excited about the rest of the year.
History Repeats Itself
Last year saw the S&P 500 gain 16.4%. That was on top of 2024’s 23.3%, and 2023’s 24.2%.
The historic AI tech boom has been leading the way.
And it’s reminiscent of the dot-com tech boom in 1995-1999 when the market surged by double-digits each year for 5 long, glorious years in a row, resulting in a 220% increase for the S&P, while plenty of individual stocks were up several hundred percent to several thousand percent.
I believe we could see the same thing again now.
And so does legendary trader Paul Tudor Jones. In a recent interview, he said the AI-driven bull market still has “another year or two to run,” and compared it to the late 1990’s tech boom.
That has been my sentiment all along, and comports with my expectation that we’ll see 5 years in a row of double-digit market gains, just like we did back then.
This year (2026), would be year 4, while 2027 would be year 5. But nobody says it has to stop there. With AI being touted as the most transformational tech breakthrough ever, it could very well last much longer.
Moreover, I think we can soar beyond ‘just’ a 20% gain.
Since 1988, only five times has the S&P had an annual gain of 30% or more. Just 5 times over the last 38 years.
But did you know that 2 of those 5 times happened in the 1995-1999 dot-com boom?
In 1995, it was up 37.6%. And in 1997 it was up 33.4%.
And the last time we saw a 30% gain was back in 2013.
We’re due for one, in my opinion.
Plus, with the AI boom being even bigger than the dot-com boom, driven by real earnings and real growth, if there ever was a reason to see a 30% gain, now is the time.
And AI will be one of the key drivers for stocks for years to come.
A recent comment underscoring the AI trade came from AMD CEO Lisa Su, who characterized the demand for AI as “insatiable,” and said her company alone could grow by 35% a year for the next 3-5 years because of that. In fact, she said the AI market is "faster than anything we've seen before.” And she predicted the AI data center market could grow to “$1 trillion” by 2030.
A resounding outlook for the scale of AI.
Here’s a few more, by NVIDIA CEO Jensen Huang:
“AI is the most powerful technology force of our time.”
“AI will revolutionize every industry, from healthcare to transportation.”
“We are at the beginning of a new computing era.”
And while it transforms the world as we know it, it also has the potential to transform one’s portfolio.
But in addition to the ongoing AI boom, there’s plenty of other reasons to expect another year of big gains.
Continued . . .
------------------------------------------------------------------------------------------------------
Saturday Deadline: Claim your Free Copy of Finding #1 Stocks
One single idea changed Kevin Matras’ life as an investor, allowing him to tap into the greatest force driving stock prices. In Finding #1 Stocks, Kevin explains his top stock-picking secrets and strategies based on this powerful concept.
In 2025…while the market gained +17.5%...these strategies produced gains up to +98.6%.¹
You can take full advantage of them without attending a single class or seminar, in a lot less time than you think. Opportunity ends at midnight tonight.
Get your free book now >>
------------------------------------------------------------------------------------------------------
A Productivity Boom Is Underway Too
We are now in the strongest productivity environment since the late-1990’s tech boom.
In fact, full-year productivity growth is trending at 2.0%, making it the strongest period in more than 25 years.
What’s noteworthy is that productivity growth typically slows in the late stages of expansion as capacity tightens and incremental gains are harder to extract.
But it accelerates at the beginning of a new growth phase when new technologies are adopted, and businesses unlock efficiencies that weren’t previously possible.
That’s why people are comparing it to the late 1990’s. Productivity jumped back then due to the technology gains from the internet boom.
And we could be seeing the same thing now, thanks to the technology gains from the AI boom.
The pattern is clear, as productivity jumps, broader economic expansion follows. And the current above-trend productivity gains are another marker for potentially big growth ahead – for the economy and the market.
The Earnings Outlook Is For Growth
Let’s also not forget that earnings are the main driver of stock prices.
And it’s pointing to strong growth.
Q3 earnings season just got started. And that’s great news since stocks typically go up during earnings season. And I’m expecting another stellar performance with a 24.6% EPS growth rate.
Q4’26 is forecast at 27.4%.
And Q1’27 is forecast at 21.7%.
Wow!
These numbers are nothing short of spectacular.
Once again, earnings are the key driver of stock prices.
And that’s why it looks like there’s a lot more upside to go for the market.
Do What Works
So, how do you fully take advantage of the market right now?
By implementing tried and true methods that work to find the best stocks.
For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 29 of the last 38 years (a 76% win ratio) with an average annual return of nearly 24% per year? That's more than 2 x the S&P, including 4 bear markets and 4 recessions. And consistently beating the market year after year can add up to a lot more than just two times the returns.
It also killed in 1995 with a 52.6% gain; 1996 with 40.9%; 1997 with 43.9%; 1998 with 19.5%; and 1999 with 45.9%. It was also up in 2000 by 14.3% while the S&P was down.
Did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!
Those two things will give any investor a huge probability of success and put you well on your way to beating the market.
But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.
So, the next step is to get that list down to the best 5-10 stocks that you can buy.
Proven Profitable Strategies
Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.
And by concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.
Of course, this won't preclude you from ever having another losing trade. But if your stock picking strategy picks winners more often than losers, you can feel confident that your next trade will have a high probability of success.
Here are a few of my favorite strategies that have regularly crushed the market year after year.
New Highs: Studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 39.6% vs. the S&P’s 8.1%, which is 4.9 x the market.
Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 42.4%, beating the market by 5.2 x the returns.
Filtered Zacks Rank 5: This strategy leverages the Zacks Rank #1 Strong Buys, and adds two time-tested filters to narrow the list of stocks down to five high probability picks each week. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 45.4%, which is 5.6 x the market.
The best part about these strategies (aside from the returns) is that all of the testing and hard work has already been done. There’s no guesswork involved. Just point and click and start getting into better stocks on your very next trade.
Where To Start
Now is the time to put yourself in a position to capture huge gains. Fortunately, I have a great resource that will help you take advantage of today's bullish outlook.
I'm letting you in on virtually every trading secret I've learned over my life as an investor to beat the market in my book, Finding #1 Stocks.
It details Zacks' most successful strategies - many that have never been made public - giving you the potential to beat the market by a substantial margin. For example, while the S&P gained +17.5% in 2025, our stock-picking strategies produced gains as high as +98.6%.¹
Today, I'm sending it to you - free.
As an added bonus, you'll be able to access our online Zacks Method for Trading: Home Study Course, which lets you quickly review the latest stocks from those strategies.
With this fun, interactive online program, you can master the Zacks Rank in your own home and at your own pace. You don't have to attend a single class or seminar.
You'll quickly see how to get the most out of the proven system that has more than doubled the market for over three decades. Discover what kind of trader you are, how to find stocks with the highest probability of success, and how to trade them so you can consistently beat the market no matter where stock prices are headed.
The course will also help you create and test your own stock-picking strategies.
Please note: Copies of Finding #1 Stocks are limited and your opportunity to get one free ends at midnight tonight, unless we run out of books first. If you're interested, I encourage you to check this out now.
Reserve Finding #1 Stocks and access Zacks Method for Trading: Home Study Course >>
Thanks and good trading,
Kevin
Zacks Executive VP Kevin Matras is responsible for all of our trading and investing services. He developed many of our most powerful market-beating strategies and directs the Zacks Method for Trading: Home Study Course.
¹ The individual strategies mentioned herein represent only a portion of the ones covered in the course.
View the Zacks #1 Rank List
Image: Bigstock
Are You Ready For A Year-End Rally?
Just 2½ months left in the year. At present, the S&P is up 11.9% YTD, with the Nasdaq up 12.5%.
But I’m expecting a lot more upside to go.
For one, Q4 has just begun. And historically, the fourth quarter is the best quarter of the year. Since 1950, the S&P has gone up 79% of the time, with an average gain of 4.1%.
This year, however, has the potential to be much larger.
I should also mention that October is typically the best month for stocks in midterm years, which we are in. The gain averages 3.0%. And November is close behind with 2.7%. And both have win ratios of greater than 70%, with October up 73.7% of the time and November up 78.9% of the time.
But there’s a lot more going for the market than just the high-probability seasonal tendencies. That includes the soaring earnings outlook. (More on that in a bit.)
For those who wished they would have taken better advantage of this year’s rally, the good news is that it looks like the next few months could be the best few months of the entire year.
But before I get into the myriad of reasons why I think the market is just too strong to hold back right now, let me address some of the recent headlines.
The Fed
After the Fed’s quarter-point rate hike last month (the first one in 3 years), stocks rallied on the news. In fact, both the S&P and Nasdaq made new all-time highs shortly thereafter. (Recent pullback notwithstanding.)
While the Fed penciled in one more rate hike by year’s end, it’s not likely to come when the Fed meets again later this month (10/28). Plus, with the midterms just a few weeks away, that decision is expected to be punted to the following meeting on 12/9.
Inflation
The most recent CPI and PPI inflation reports showed both headline and core rates ticking back up. A bit of a surprise as that was in contrast with the latest Personal Consumption Expenditures (PCI) index (the Fed’s preferred inflation gauge), which showed inflation easing. It was also in contrast to previous CPI and PPI reports, which have come in better-than-expected. Nonetheless, that was the latest read.
Much of the increase can be attributed to higher oil prices. But that might be ready to turn the corner. Either way, we’ll get four more inflation reports, and two more employment reports before the December Fed meeting.
Crude Oil
Tensions in the Middle East continue.
But Middle East crude exports have risen to 16.3M barrels per day, which is the highest since the war began.
That’s approximately 80% of pre-war levels. To be clear, Hormuz volume is only at 40% of pre-war levels. And that’s with Iran exports effectively at zero. But other Middle East routes used by Saudia Arabia, the UAE and Oman, to name a few, have increased significantly, putting combined shipments at just 20% below the pre-war baseline.
Additionally, the G7 announced they would be releasing as much as 100 million barrels of diesel fuel and crude oil over the course of four months.
All of the above should help cap oil. Ease inflation. And help put a lid on rates.
Treasury Yields
There’s been much ado about rising Treasury yields. But there needn’t be.
With the Fed Funds Rate (FFR) at 3.88% midpoint, and the 10-yr yield at 5.10%, the spread is 122 basis points.
Historically, over the past 40 years (1985-2025), the spread between the FFR and the 10-yr, has been 100 to 150 bps, with the median at 120.
So, there’s nothing ominous about the recent rise in yields. It’s right in line with the historical norm, and appears to be a simple reversion to the long-run median spread of 120 bps.
Now, here’s why you should get excited about the rest of the year.
History Repeats Itself
Last year saw the S&P 500 gain 16.4%. That was on top of 2024’s 23.3%, and 2023’s 24.2%.
The historic AI tech boom has been leading the way.
And it’s reminiscent of the dot-com tech boom in 1995-1999 when the market surged by double-digits each year for 5 long, glorious years in a row, resulting in a 220% increase for the S&P, while plenty of individual stocks were up several hundred percent to several thousand percent.
I believe we could see the same thing again now.
And so does legendary trader Paul Tudor Jones. In a recent interview, he said the AI-driven bull market still has “another year or two to run,” and compared it to the late 1990’s tech boom.
That has been my sentiment all along, and comports with my expectation that we’ll see 5 years in a row of double-digit market gains, just like we did back then.
This year (2026), would be year 4, while 2027 would be year 5. But nobody says it has to stop there. With AI being touted as the most transformational tech breakthrough ever, it could very well last much longer.
Moreover, I think we can soar beyond ‘just’ a 20% gain.
Since 1988, only five times has the S&P had an annual gain of 30% or more. Just 5 times over the last 38 years.
But did you know that 2 of those 5 times happened in the 1995-1999 dot-com boom?
In 1995, it was up 37.6%. And in 1997 it was up 33.4%.
And the last time we saw a 30% gain was back in 2013.
We’re due for one, in my opinion.
Plus, with the AI boom being even bigger than the dot-com boom, driven by real earnings and real growth, if there ever was a reason to see a 30% gain, now is the time.
And AI will be one of the key drivers for stocks for years to come.
A recent comment underscoring the AI trade came from AMD CEO Lisa Su, who characterized the demand for AI as “insatiable,” and said her company alone could grow by 35% a year for the next 3-5 years because of that. In fact, she said the AI market is "faster than anything we've seen before.” And she predicted the AI data center market could grow to “$1 trillion” by 2030.
A resounding outlook for the scale of AI.
Here’s a few more, by NVIDIA CEO Jensen Huang:
“AI is the most powerful technology force of our time.”
“AI will revolutionize every industry, from healthcare to transportation.”
“We are at the beginning of a new computing era.”
And while it transforms the world as we know it, it also has the potential to transform one’s portfolio.
But in addition to the ongoing AI boom, there’s plenty of other reasons to expect another year of big gains.
Continued . . .
------------------------------------------------------------------------------------------------------
Saturday Deadline: Claim your Free Copy of Finding #1 Stocks
One single idea changed Kevin Matras’ life as an investor, allowing him to tap into the greatest force driving stock prices. In Finding #1 Stocks, Kevin explains his top stock-picking secrets and strategies based on this powerful concept.
In 2025…while the market gained +17.5%...these strategies produced gains up to +98.6%.¹
You can take full advantage of them without attending a single class or seminar, in a lot less time than you think. Opportunity ends at midnight tonight.
Get your free book now >>
------------------------------------------------------------------------------------------------------
A Productivity Boom Is Underway Too
We are now in the strongest productivity environment since the late-1990’s tech boom.
In fact, full-year productivity growth is trending at 2.0%, making it the strongest period in more than 25 years.
What’s noteworthy is that productivity growth typically slows in the late stages of expansion as capacity tightens and incremental gains are harder to extract.
But it accelerates at the beginning of a new growth phase when new technologies are adopted, and businesses unlock efficiencies that weren’t previously possible.
That’s why people are comparing it to the late 1990’s. Productivity jumped back then due to the technology gains from the internet boom.
And we could be seeing the same thing now, thanks to the technology gains from the AI boom.
The pattern is clear, as productivity jumps, broader economic expansion follows. And the current above-trend productivity gains are another marker for potentially big growth ahead – for the economy and the market.
The Earnings Outlook Is For Growth
Let’s also not forget that earnings are the main driver of stock prices.
And it’s pointing to strong growth.
Q3 earnings season just got started. And that’s great news since stocks typically go up during earnings season. And I’m expecting another stellar performance with a 24.6% EPS growth rate.
Q4’26 is forecast at 27.4%.
And Q1’27 is forecast at 21.7%.
Wow!
These numbers are nothing short of spectacular.
Once again, earnings are the key driver of stock prices.
And that’s why it looks like there’s a lot more upside to go for the market.
Do What Works
So, how do you fully take advantage of the market right now?
By implementing tried and true methods that work to find the best stocks.
For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 29 of the last 38 years (a 76% win ratio) with an average annual return of nearly 24% per year? That's more than 2 x the S&P, including 4 bear markets and 4 recessions. And consistently beating the market year after year can add up to a lot more than just two times the returns.
It also killed in 1995 with a 52.6% gain; 1996 with 40.9%; 1997 with 43.9%; 1998 with 19.5%; and 1999 with 45.9%. It was also up in 2000 by 14.3% while the S&P was down.
Did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!
Those two things will give any investor a huge probability of success and put you well on your way to beating the market.
But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.
So, the next step is to get that list down to the best 5-10 stocks that you can buy.
Proven Profitable Strategies
Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.
And by concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.
Of course, this won't preclude you from ever having another losing trade. But if your stock picking strategy picks winners more often than losers, you can feel confident that your next trade will have a high probability of success.
Here are a few of my favorite strategies that have regularly crushed the market year after year.
New Highs: Studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 39.6% vs. the S&P’s 8.1%, which is 4.9 x the market.
Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 42.4%, beating the market by 5.2 x the returns.
Filtered Zacks Rank 5: This strategy leverages the Zacks Rank #1 Strong Buys, and adds two time-tested filters to narrow the list of stocks down to five high probability picks each week. Over the last 26 years (2000 through 2025), using a 1-week rebalance, the average annual return has been 45.4%, which is 5.6 x the market.
The best part about these strategies (aside from the returns) is that all of the testing and hard work has already been done. There’s no guesswork involved. Just point and click and start getting into better stocks on your very next trade.
Where To Start
Now is the time to put yourself in a position to capture huge gains. Fortunately, I have a great resource that will help you take advantage of today's bullish outlook.
I'm letting you in on virtually every trading secret I've learned over my life as an investor to beat the market in my book, Finding #1 Stocks.
It details Zacks' most successful strategies - many that have never been made public - giving you the potential to beat the market by a substantial margin. For example, while the S&P gained +17.5% in 2025, our stock-picking strategies produced gains as high as +98.6%.¹
Today, I'm sending it to you - free.
As an added bonus, you'll be able to access our online Zacks Method for Trading: Home Study Course, which lets you quickly review the latest stocks from those strategies.
With this fun, interactive online program, you can master the Zacks Rank in your own home and at your own pace. You don't have to attend a single class or seminar.
You'll quickly see how to get the most out of the proven system that has more than doubled the market for over three decades. Discover what kind of trader you are, how to find stocks with the highest probability of success, and how to trade them so you can consistently beat the market no matter where stock prices are headed.
The course will also help you create and test your own stock-picking strategies.
Please note: Copies of Finding #1 Stocks are limited and your opportunity to get one free ends at midnight tonight, unless we run out of books first. If you're interested, I encourage you to check this out now.
Reserve Finding #1 Stocks and access Zacks Method for Trading: Home Study Course >>
Thanks and good trading,
Kevin
Zacks Executive VP Kevin Matras is responsible for all of our trading and investing services. He developed many of our most powerful market-beating strategies and directs the Zacks Method for Trading: Home Study Course.
¹ The individual strategies mentioned herein represent only a portion of the ones covered in the course.