Macro Risk Advisors' John Kolovos talks possible volatility in 2026

Dominic Chu (Senior Markets Correspondent) 00:00.000

Uh, John, thank you very much for joining us here this morning or this afternoon. I'm sorry, I've been here for the closing bell and the opening bell as well. Let's talk a little bit about what the charts are telling you about whether or not we could see this continued momentum

Dominic Chu (Senior Markets Correspondent) 00:11.960

in the coming weeks and months.

John Kolovos (Chief Technical Strategist) 00:14.720

Hey, Dom, good to see you and I and I feel you're paying uh this time of the year. It's it's tough to kind of know which which way we're going. Uh, you know, for for next year, I would even say going for the next couple weeks or so, uh I think the market can continue to push up

John Kolovos (Chief Technical Strategist) 00:27.160

higher. We have good seasonality. Uh, I think the S&P can get itself up to perhaps 7,200 or so. And then at that point, I believe the market's going to have a bit of a rough go next year. I do think there's a strong, if not above average odds that we see at least a major

John Kolovos (Chief Technical Strategist) 00:41.960

correction, something around 15%. If not, a proper bear market at some point next year.

Dominic Chu (Senior Markets Correspondent) 00:47.920

How exactly do you then reconcile those expectations with this idea that we've seen a shallowing of the depths of any kind of a pullback throughout the course of the last year or even two, there was There's a time when maybe a 10 or 15% pullback was something that you could

Dominic Chu (Senior Markets Correspondent) 01:03.280

almost bank on. These days though, every single dip seems to be bought, not just by institutions, but now by retail investors and traders as well. How exactly then do the charts tell you that you could see a deeper pullback even though we haven't really seen one since say the

Dominic Chu (Senior Markets Correspondent) 01:19.520

April tariff tantrum lows?

John Kolovos (Chief Technical Strategist) 01:21.960

Fair fair point and it's a great point. I mean the trends are still very very strong here on the equity marks. S&P higher highs, higher lows, still above your 50-day moving average. You're absolutely right. Uh pullbacks have been pretty benign uh outside of the terror tantrum

John Kolovos (Chief Technical Strategist) 01:32.800

like you said. But what we're going into next year, we have a lot of uncertainty when it comes to the midterm election. Uh and a big part of technical analysis is we study different types of market cycles and next year being year two of the presidential cycle, that year tends to

John Kolovos (Chief Technical Strategist) 01:45.200

typically come with it uh below average returns. On average around 3 or 4% gain for for the second year of a of a presidential term. But also bear markets tend to occur or at least tend to bottom in the second uh year of of the presidential cycle. So what does actually

John Kolovos (Chief Technical Strategist) 02:00.040

ultimately mean, that means we have to peak at some point. So the presidential cycle tells us we should prepare for a lot of volatility. And number two, I would say is that the AI trade has it's still I kind of say still correcting from the October highs. And I do believe that

John Kolovos (Chief Technical Strategist) 02:17.320

we're no longer in this all boats are going to rise with the tide sort of thing when it comes to the technology sector. So I think technology is going to have a bit of a headwind next year. So the math doesn't necessarily work for like significant gains to the upside side,

John Kolovos (Chief Technical Strategist) 02:30.280

unless you're going to get technology to ride with it. So, you have your midterm, you have some AI headwinds, and then also, of course, uncertainty when it comes to the Fed chair. I don't think that's going to get resolved before April or May, and then in turn, interest rates

John Kolovos (Chief Technical Strategist) 02:44.440

are likely to remain sideways if not tilted higher. Uh, so in the beginning of the year, I think the tape is going to it's going to be bracing for those sort of uh volatility moves. So, elections and the policy uncertainty that we have, I think it's going to be quite quite a bit

John Kolovos (Chief Technical Strategist) 02:59.600

of a headwind time for the markets to to work through.

Dominic Chu (Senior Markets Correspondent) 03:02.200

John, can we tilt your focus a little bit away from that equities trade into one part of the market that is seeing very strong record highs throughout the course of the year, and that's in the precious metals, specifically gold and silver, which again have hit records again

Dominic Chu (Senior Markets Correspondent) 03:14.640

today. So, what is the outlook for those commodities, especially for gold and silver?

John Kolovos (Chief Technical Strategist) 03:19.960

So, commodities in general, we just say are in a generational bull market, okay? They bottomed in 2020, and they have years to go to the upside. So, once But now we take a step back, and we see what's going with the these precious metals. Yeah, I've been telling clients to buy

John Kolovos (Chief Technical Strategist) 03:32.480

anything that's shiny uh this year and even going into next year. But if you want to know the the exact levels that I'll be looking for when it comes to silver in particular, I could see silver trading up to around the the 80 to 85 area before the next meaningful pullback. And

John Kolovos (Chief Technical Strategist) 03:46.200

when it comes to gold, I've been I've been penning in at least 5,000 but with the potential for an extension up to the 7,000 area. So I think there're still strong charts. Sure, they're going to be overbought and they're going to pull back. Yeah, absolutely. But for for Now, I

John Kolovos (Chief Technical Strategist) 04:00.400

think that these are really, really strong trends. And And I just want to say one thing though, like this is how commodities tend to behave. They tend to go parabolic. They tend to surprise folks to the upside. That's just typical commodity behavior. I think at some point next

John Kolovos (Chief Technical Strategist) 04:12.400

year, they're going to see a major peak. But for now, yeah, you ask for that silver, 80 to 85, and for gold, yeah, 5,000 with the potential to extend up to 7,000.