David Katz on 2026 Market Outlook: Rotation, Value Stocks, and Tech Trends

2026 Market Outlook: Rotation and Broadening

• 🎯 The fourth quarter is considered the Santa Claus rally, with expectations for 2026 to be a year of market rotations.
• 💡 The market is expected to broaden out, with sectors that performed well in the current year potentially slowing down, and underperforming areas catching up.

Dividend and Value Stock Potential

• 📈 While some dividend and value ETFs have underperformed the S&P 500, there's anticipation for these sectors to reaccelerate.
• 💰 Sectors like consumer staples and discretionary, which have higher representation in value indexes, are expected to become more interesting due to lower valuations.
• 🚀 The strategy suggests moving towards value, dividends, and small caps rather than solely focusing on mega-cap tech.

Commodities: Caution Advised

• ⚠️ Gold and silver have had strong years, but the view is that it's too late to chase these rallies.
• 💰 It's recommended to take profits on existing commodity exposure rather than investing new money.

Tech Sector Outlook

• ⚡ The tech trade is expected to remain positive but not as robust as seen this year.
• 📊 Rotations within the MAG 7 stocks are likely, with some lagging names like Meta and Microsoft potentially seeing better performance.
• 🔍 While Google has performed exceptionally well, expectations for the upcoming year are for good, but not nearly as good performance.