Podcast Summary: Excess Returns – "Looking at Market Technicals Heading into 2026"

Guest: Katie Stockton (Founder & Managing Partner, Fairlead Strategies)
Hosts: Matt Zeigler, Justin Carbonneau
Date: January 8, 2026

Episode Overview

This episode focuses on technical analysis and market trends as investors head into 2026. Technical strategist Katie Stockton joins Excess Returns to offer a detailed look at long-term versus short-term signals, sector leadership, chart formations, and tactical positioning for US and global equities. The discussion touches on large-cap tech, sector rotation, small caps, breadth, non-price indicators, commodities, and the prospects for international and alternative assets like gold and Bitcoin.

Key Discussion Points & Insights

1. The Technical Setup for 2026

• Macro Trend: The long-term US equity uptrend remains intact, but the pace is now expected to be more gradual with increased volatility compared to the sharp rally from the April 2025 lows.

  • "It's usually right to assume that a trend in motion will stay in motion. But we also have evidence that it slowed a little bit to suggest that we'll get into a less steep rally." – Katie Stockton [00:00]

• Short- vs Long-Term Views:

  • Long-term: Still bullish, very few confirmed long-term sell signals.
  • Short-term: Cautiously bearish, with loss of momentum and mild corrective indications especially from Q4 2025.
    • "The shorter term view is more bearish leaning for us right now. And it comes from the loss of momentum that we saw that was pretty distinct in Q4." – Katie Stockton [01:25]/[04:28]

• Evidence Over Forecasts: Stockton emphasizes reacting to confirmed technical signals rather than anticipating them, using tools like DeMark indicators and stochastics.

  • "We don't like to anticipate the confirmation, we just like to react to it and indeed we don't have that yet." – Katie Stockton [03:02]

2. Technical Tools & Chart Insights

• Ichimoku "Clouds": Used to assess support/resistance zones and the prevailing trend, considered more forgiving than moving averages.

  • "The cloud itself...creates sort of a moving gauge of not only the support and resistance levels, but also a read on the primary trend over that time frame." – Katie Stockton [08:12]

• Indicators in Concert: Stockton combines clouds, stochastics, and MACD to get higher conviction when signals align with the prevailing longer-term trend.

  • "Just how you combine the indicators I think is where you're right or wrong or you know, shades thereof." – Katie Stockton [10:15]

• Triangle Formations: The NASDAQ 100’s daily chart shows a neutral triangle, often preceding a spike in volatility and signaling to watch for either a breakout or breakdown.

  • "The triangles are indeed neutral formations, but they show a market that's gotten less and less volatile. But it tends to proceed a pretty big spike in that volatility either to the upside or downside." – Katie Stockton [04:28]/[11:16]

3. Large-Cap Tech Divergence & Market Concentration

• Shift in Leadership:

  • Tech was the leader, but momentum has softened.
  • Alphabet has emerged as a near-term outperformer relative to Microsoft, Meta, and Nvidia.
  • There's dispersion among "Mega Cap" stocks, possibly signaling they're now treated more individually by investors, rather than as a monolithic group.
    • "Investors are perhaps being a bit more stringent on the fundamental outlook...not necessarily treating them as a basket or as a collective investment anymore." – Katie Stockton [14:16]

• Stock Picks:

  • Alphabet and Amazon seen as relatively strong.
  • Less interest in adding to Meta or Microsoft at present.
    • "I want to honor the stocks that have the best upside momentum and that probably would be Alphabet within the whole complex." – Katie Stockton [18:07]

4. Market Breadth & Small/Mid Caps

• Breadth: Market participation (as measured by NYSE advance/decline) was strong through most of 2025, but concentration in Mega Caps persisted until recently.
• Small Cap Turn: Some evidence of improved small-cap relative strength (e.g., upward tick in the Russell 2000's 200-day average), but too early for a decisive rotation.
  • "A little bit better action would be indicated by that upturn...a maybe a more neutral takeaway for that relative strength overall." – Katie Stockton [19:35]

5. Growth vs Value Dynamics

• Long-Term Growth Trend: Uptrend persists, but value is enjoying a temporary phase of outperformance. Stockton favors staying on the right side of the prevailing growth trend for the long run while watching momentum for timing value entry/exit.
  • "The long term uptrends favoring growth…That’s just in line with what we said about the technology sector as the primary source of upside leadership." – Katie Stockton [21:46]

6. Non-Price & Sentiment Indicators

• Breadth and Sentiment: Useful for context, but not relied upon for timing.

• CNN Fear & Greed Index: When extremes are reached (sub 25% or above 75%), Stockton looks for confirmation from price and momentum indicators before acting.

  • "You want to see that [sentiment] reading then give way to an uptick both in that index and then also in the momentum gauges that you track." – Katie Stockton [25:11]

• Retests as Entry Points: Retests after an initial market downdraft and oversold signal can offer stronger technical entries.

  • "The retest can actually be the better entry...that then gives way to support discovery." – Katie Stockton [28:40]

7. Sector Analysis

• Favorites: Communication services (helped by Alphabet), healthcare (emerging turnaround), financials, industrials, some materials.
• Tech: Not a favorite at the moment (shorter term), though Fairlead’s ETF retains tech exposure for the long-term uptrend.
• Energy: In a prolonged downtrend but showing signs of a turnaround. Stockton expects attractive setups as soon as crude breaks key levels.
• REITs and Utilities: Both showing potential for bottoming and improvement if downward pressure on yields is sustained.
  • "Turnarounds are starting to unfold within the energy complex...Real estate has been one that would be not even painfully sideways, I guess in absolute terms, but in relative terms… starting to see some setups within the real estate sector that are kind of intriguing." – Katie Stockton [35:26]

8. The Fairlead TAC ETF & Portfolio Positioning

• Systematic, Trend-Following: 100% systematic, monthly-bar driven signals. Aims to limit drawdowns by sector rotation and shifting up to 25% assets into risk-off alternatives (short/long-term treasuries, gold).
  • "We're letting the market speak to us rather than telling the market, you know, what we think." – Katie Stockton [39:40]
• A Core, Balancing Component: Designed as a core or "ballast" allocation, especially useful alongside tech-heavy equity portfolios.
  • "It's a great fund to balance out what is often a very tech heavy portfolio." – Katie Stockton [42:24]

9. International & Alternative Assets

• International Equities: Recent breakouts suggest a case for more balanced US/international allocations, but major international markets will likely pull back if US equities do.
• Emerging Markets & China: Stockton is favorable on China’s longer-term technical turnaround.
• Gold & Silver: Stockton remains bullish, with gold showing a steadier uptrend and silver more volatility; both benefit as alternative assets, and even platinum/palladium show promise.
  • "We're very much on board with holding gold positions and even adding to them where you don't have any overbought indications that are being confirmed." – Katie Stockton [48:19]
• Dollar Index: Recent cyclical weakness, but strong technical support may send the dollar higher in 2026.
  • "A sense that this trendline support is pretty meaningful and that...we see in at least the first few months of this new year dollar that can work its way higher." – Katie Stockton [52:33]

10. Bitcoin & Correlations

• Bitcoin: Remains in a stair-step uptrend with volatility; however, long-term indicators have softened, suggesting the current rally could be a relief rally.
  • "The indicators right now do point higher on the short and intermediate term timeframes, but we have a downtick in all of the long term indicators." – Katie Stockton [54:38]
• Correlation: Correlation with tech stocks (e.g., NASDAQ 100) remains high but is cyclical; do not depend too heavily on it for cross-asset signals.

Memorable Quotes

• "We're always going to give more weight to the price trends because we think that's what we're trafficking in. Right. We want to make sure we have those trends on our side first." – Katie Stockton [23:17]
• "We're all about waiting for confirmation, whether it means an active buy signal or something different and more conservative than, you know, just buying into that sort of initial downdraft." – Katie Stockton [29:03]
• "If you think about it as, you know, a desired outcome. Right. You want to participate in the uptrend and be in the best sectors of the market." – Katie Stockton [42:24]
• "There's nothing that is a no brainer but we always would honor things that are trending higher, these long term uptrends." – Katie Stockton [60:09]

High-Value Timestamps

• 00:00: Macro trend analysis and approach to confirmation
• 04:28: Discussion of short-term caution, Nasdaq triangle formation’s implications
• 08:12: Explanation of the Ichimoku cloud and indicator interplay
• 14:16: Large-cap tech, leadership, and stock-specific commentary
• 19:35: Small cap, market breadth, and broadening leadership
• 23:17: Breadth indicators and sentiment inputs
• 29:03: Confirmation signals and breakouts/retests
• 32:33: Sector rotation and portfolio implementation
• 39:40: The systematic nature and construction of the TAC ETF
• 45:47: International equity and emerging markets technical outlooks
• 48:19: Commodities (gold, silver, platinum, palladium) technicals
• 52:03: US dollar outlook and FX’s portfolio relevance
• 54:38: Bitcoin technical assessment and its correlation to equities
• 57:54: Summary of the tools and methodology that will drive market views in 2026

Conclusion

Katie Stockton offers a disciplined, evidence-driven approach to technical analysis and portfolio construction, warning against hasty action before confirmation and emphasizing the need for adaptive thinking as leadership rotates and markets become more volatile. While remaining constructive on long-term US equity trends and select alternative assets (especially gold and, with volatility, Bitcoin), she advocates balanced sector and geographic allocations, careful use of confirmation signals, and a methodical, systematic discipline.

For further analysis and research from Katie Stockton:

• Fairlead Strategies
• Fairlead Funds (for details on the TAC ETF)