Bears Missed Their Shot: Why the Market Could Grind Higher Into Year-End

Schaeffer's Senior Market Strategist Matthew Timpane projects a continued S&P 500 rally into year-end, targeting 7,000, citing missed opportunities for bears, strong seasonal tailwinds, and key technical support levels holding firm without signs of risk-off sector rotation. However, Timpane expresses caution for 2026, anticipating potential struggles due to historical presidential cycle patterns and rising tariff-driven inflation risks, advocating for a reactionary, price-focused investment approach.

Analysis

Schaeffer's Senior Market Strategist Matthew Timpane projects a continued S&P 500 rally into year-end 2025, asserting that bears missed their opportunity as the typical October pullback failed to materialize. This outlook is supported by strong seasonal tailwinds from November through January, historically delivering outsized returns, and the S&P 500's consistent respect for key technical levels like the 50-day and 80-day moving averages.

Timpane reaffirms a year-end S&P 500 target of 7,000, identifying it as a significant psychological milestone and a prominent "call wall." Furthermore, the absence of classic "risk-off" sector leadership, with major tech names like Google (GOOGL) and Nvidia (NVDA) holding strong, suggests the current bull trend remains structurally intact, despite energy emerging as a potential risk-off indicator.

However, the outlook for 2026 is notably cautious, with Timpane highlighting historical presidential cycle patterns where the second year averages only 3.3% returns since 1928, and only 41% of such years are positive under Republican administrations. Compounding this, tariff levels, currently at their highest since the 1930s, pose a significant risk for tariff-driven inflation.

Schaeffer's core investment philosophy emphasizes a reactionary approach, focusing on price action, key technical levels, and open interest positioning rather than predictive macro forecasting. This strategy has informed their current bullish lean for the remainder of 2025 while preparing for elevated volatility and selective positioning in 2026.

Key Decisions for Investors

• Investors should maintain a bullish stance into year-end 2025, focusing on market technicals and the absence of broad risk-off signals.
• Prepare for increased volatility and potential struggles in 2026, considering historical presidential cycle performance and rising tariff-driven inflation risks.
• Monitor key support levels like the 50-day and 80-day moving averages for tactical adjustments, and watch energy sector performance as a potential risk-off indicator.
• Adopt a selective approach for 2026, particularly within technology and cyclical sectors, aligning with a reactionary investment philosophy.