Transcription
Hey everyone, and thanks for jumping back into the equity verse. Today, we're going to talk about the S&P 500 and provide another update on the outlook for 2026. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on ITC Premium at intothecryptoverse.com.
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So, we did a video about a month ago, I think, uh, essentially just called the same thing, like outlook for the rest of 2026. And what we said in that video was the most likely path here was to get a shallow June correction. Okay? So, when you look at when you look at this, you can see we had had like eight or nine green weeks in a row. Um, we suggested a June correction, shallow, would be timely because it would it would line up with prior midterm year corrections in June. Uh, if you look at at when Trump was president in 2018, what you'll notice is that we had a low early in the year, and then we also had this very brief correction in June, followed by another larger, by a larger rally, and then we had the final drop later in the year. Okay?
So, we've talked about this idea previously about getting, you know, a a shallow correction in June. You can also see there was a a bit of a correction in June of 2022 as well. Now that we're almost at the end of June, I thought it would be time to sort of update these ideas. So, the correction that we we had was about 5%, and I think in the video I suggested somewhere between like 5 to 8% or something like that. So, I mean, it always could go down a little bit more, but what you'll often see happen with the S&P is you'll see a a low early on in the midterm year. So, you have early 2026. You'll also see a low in early 2022, and in early 2018, and also at the very beginning of 2014. You'll sort of get an initial correction, and then oftentimes you'll get a shallow correction sometime like in the early part of the summer, like what we have been in for the last few weeks. Uh, we also had the same thing in 2022, and the same thing in 2018.
And then what happens after that historically, after that correction ends, is that you get another rally kind of in the summer where the it's not like a strong rally. The market just kind of drifts higher on lower volume because people are out of the office. They're on vacation. They're actually living their lives rather than just staring at the screen, the charts all day. And then what usually happens is then you get a second drop in the stock market that occurs later in the year. So, you'll notice we had a big one in the end of 2018, the end of 2022, and also the end of 2014. Now, the one in 2014 did not start until September. The one in 2018 also started in September. The one in 2022 started in August.
So, I would argue that the most likely path would be what we've seen so far, right? The the shallow June correction where you kind of come back down. And again, it's not impos, I mean, June's not over yet, and sometimes these things can even go into the early first few days of the following month, so it's not like an exact science. Uh, maybe you'll see it tag that 21-week EMA or something, but it doesn't have to. Perhaps back up, and then sometime around that August, September time frame, I would expect a larger drop. So, the June drop, I think made sense to be a shallow drop. There's just not a lot of volume around, you know, this part of the year. But later in the year, I think you'll have a larger drop in the stock market that will then kind of help reset things, likely lead to Bitcoin putting in a market cycle bottom. We could also see gold bottoming out around that time, if not a little bit sooner. So, something like that.
Now, what is a deep, what could a deeper correction look like? Well, in 2018, it was a 20% drop. In 2022, it was also a 20% drop. In 2014, it was about a 10% drop. So, I would say somewhere between 10 and 20% is where the next correction will end up being, would be my guess. That'll start sometime later this year. And again, you know, this is just kind of how midterm years go where you'll get a shallow June correction, the market will drift higher in like July and August, and then sometime in like the August, September time frame, you'll see a larger correction, more than likely. Sorry.
Now, again, this is not financial advice. I can't say for sure that these things are going to happen. It doesn't invest, it doesn't affect my investing strategy. I just DCA low expense ratio index funds every single month, no matter what. So, this is more of an academic exercise to get people sort of mentally prepared for what, in fact, may play out for the S&P 500.
There's other, there's a couple other things that I I'd like to show you guys, and it involves, if you look at the political, uh, charts that we have in terms of like how does the S&P perform under various presidents. We can look at the presidential term return paths, uh, for the stock market under various presidents. And what you'll see is that under, this is Donald Trump's second term. And if you compare it to Donald Trump's first term, it's following it pretty closely. There are some deviations, but it's following it fairly closely. And so when you look at this, you can see that we're getting pretty close to when you would expect a a rally back up. Could be a few days away. Um, and then that would set up for a larger drop in in the back half of the year. So, this is an interesting chart. If you look at this term compared to Joe Biden, it's that we're actually seeing the S&P currently outperform what it did back under Biden. If you look at it compared to Obama's second term, it is slightly underperforming. But I I find it interesting just how, you know, closely things can match up, like Trump's first term versus his second term.
And then if you were to flip this over to say the dollar, and how the dollar has performed under Trump's first term versus second term, look how close they are, right? Like it's almost the same thing. It drops for the first year, bottoms out, and then begrudgingly goes higher. That ends up being one of sort of the headwinds that you could, you know, say, okay, this is the reason for the correction in the stock market later in the year. It's because of the a persistent dollar that just simply begrudgingly wants to go higher, despite perhaps the the best intentions by the powers of be that want it to actually go lower, it still begrudgingly tends to go higher, um, in midterm years.
And then the other thing we could look at is we could look at the year-to-date ROI of the S&P 500 in 2026. And if you look at 2022 and 2018 and 2014, you can kind of see like when those corrections started. So, a lot of times you'll have sort of a shallow June correction, like we just had. And then the market, sometimes it can extend into into July. Um, but then you'll often find a larger correction starting around the October, or sorry, August to September time frame. Um, that then sets up that that larger correction. And if you look at the S&P 500 and compare it to the average of prior midterm years going back to say the 1920s, you can see that on average, the low for the stock market occurs in like late September or early October is when it often occurs. Now, we had a larger drop over here. We've sort of gone a lot higher, sort of overcompensated. Um, but that's more of like a a seasonality type thing.
But anyways, that's my guess for how the stock market will play out for the rest of the year. And and then hopefully that reset in late 2026 will be a much-needed reset to kind of calm, um, some of the euphoria we've seen and maybe reset some of those metrics, um, especially in in in Bitcoin to then enter into the next bull market.
If you guys like the content, make sure you subscribe, give the video a thumbs up. If you want access to these charts, you can check out the sale on ITC Premium. Links in the description below. And finally, uh, it'd be great to see a lot of you people, uh, in person, and, um, it's great to meet people at these conferences and and if you want to meet up, meet other conference speakers, uh, see other people, check out the Investing Through the Cycles conference taking place in Miami. Um, the main conference is November 21st, but we'll have some events on either side from the 20th to the 22nd. Thank you guys for tuning in. Subscribe, and I'll see you next time. Bye.