Former Wall Street Bull Now Expects Stocks To Fall 15-20% This Year | Mark Newton, Fundstrat

**Mark Newton** (0:00)
There are a couple of different negatives, I guess, heading into this year. One is that cycles that I look at tend to turn down right at the latter part of February, and should be lower into about October, but it won't be a straight shot. So I'm actually expecting potentially a 15 to 20% decline.

**Adam Taggart** (0:26)
Welcome to Thoughtful Money, Thoughtful Money founder and your host, Adam Taggart, welcoming you here for a special interview with Mark Newton, the head of technical strategy at Fundstrat, where he works there with his partner, Tom Lee. First off, Mark, thank you so much for joining us here. I know you're in the middle of Snowmageddon back there on the East Coast, and you have a lot going on here, so thank you for making the time to do this.

**Mark Newton** (0:49)
Yeah, my pleasure, Adam. Great to be back with you.

**Adam Taggart** (0:52)
All right, and folks, you can tell I am on the road. I'm at the Vancouver Resource Investment Conference, and Mark, you can be pretty sure I'm going to ask you about gold and silver and commodities at some point in this conversation, because that's the topic du jour here at this conference normally, but given the just amazing price action we see going on in the precious metals right now, I'd love to get your thoughts on kind of what you think the drivers of that may be, and what kind of legs you think this rally still has going forward, because it's been going on for a while.
Real quickly, though, let's start more at the macro level, and Mark, you've been on this program before, and if memory serves, when I interviewed you, I want to say maybe in like late October or early November, you were, I think you described yourself there still as sort of, you know, cautiously bullish given what your models were telling you at the time, and I remember you saying that you had some concerns heading into 2026 that might cause you to be less bullish going forward, but of course you said, look, I got to wait until we actually get there to see what my models are telling me. Where are you right now as we've now, you know, what, we're three and a half weeks into the new year?

**Mark Newton** (2:10)
So I think we're setting up for much more of a choppy year than we've seen in years past. We've had now three straight years of over 15 percent gains, over 20 for the first two, and now last year being up 17 percent. Heading into a midterm election year, normally that does tend to be the weakest of the four years that make up the presidential cycle.
You know, when I'd spoken to you last, we were seeing a lot of breath deterioration in many different sectors. That has, to some extent, been resolved in the last couple months since late November. We've seen a lot of sectors sort of spring to life, which is actually a positive. The one, there are a couple of different negatives, I guess, heading into this year. One is that cycles that I look at tend to turn down right at the latter part of February, and should be lower into about October, but it won't be a straight shot. I'm actually expecting potentially a 15 to 20 percent decline, which starts in late February, early March, takes us down into May or June. We rally into the summer, and then we have a third quarter correction that largely marks the end of this consolidation.
I can't say that the secular longer-term bull market is over. I do think it's the pause that refreshes, so to speak, but I do sense that that is coming this year, and a few different reasons. One is because just the cycles are starting to suggest that that can happen. The second is that we're seeing sentiment finally start to get a little bit more optimistic on an immediate-term basis, and that has less to do with really the short-term geopolitical risk or what's happening in the US with a lot of the protests regarding immigration and this and that. It's more just about the attitudes towards the market have gotten a lot more optimistic. And that's something I was waiting to see. It really was never present last year. It went from rampant pessimism back in April to a little bit less bullish or less bearish throughout the year, but not really ever speculative and really optimistic. And we're starting to get to levels that are near that level. We're not there yet, but on a rally to 7,200, which I expect into late February, I think we'll get there. The other reason is that technology certainly has been sort of a shell of its former self. We're seeing large cap technology, the Mag-7, many of these stocks have gone sideways for about six months. Noticeable slowdown and momentum, certainly sort of a changing of the guard. When you see certain sectors like consumer staples are beating technology over the first few months, first few weeks of the year by about 300 basis points, it makes you pay attention that we're definitely seeing some sector rotation that it's important to pay attention to. And this is more than just mean reversion, I think, where the worst sectors of the prior year tend to outperform and vice versa. That can happen as you enter a new year. But I think that tech has just gotten very overbought. And I think that this is going to be the year where we do see some weakness in technology. So the good news is that I don't think it's going to be an earnings led decline. I think it's going to be, you know, largely just concentrated in large cap technology, maybe as interest rates start to push higher in the long end. But we have seen some great broadening out in many different sectors that have not worked in quite a while. And that's, I think, the bigger picture. Good news for long term investors is that weakness this year should be buyable. But I sense it's going to be a lot trickier than people expect. And that's for bulls and bears alike.