A Perspective for Navigating the Market in 2026

[The SP500 index is up 90% since October 2022 – a solid 3-year bull market without any major lasting correction and change of market regime. Investing in indices and passive products proved to be rewarding, but the obvious question now is – can this continue in 2026?

We reached out to Rocco Pellegrinelli, CEO of Trendrating, a leading provider of advanced analytics and investment research technology to 300+ firms in the institutional, asset, and wealth management business, to get his view on how to prepare for managing this year’s market.]

Hortz: What do you feel we can expect in 2026?

Pellegrinelli: A simple analysis of market cycles across the last decades demonstrates that after a sequence of years in a bull trend, there is a high probability of either a bear phase or an extended sideways market. These are possible scenarios, and in these cases, active management is the only way to generate returns.

 Betting on indices and passive products is now risky. We recommend being prepared by adding active investing methodologies that are designed to manage risk and capture the opportunities in those types of markets.

For instance, a great opportunity for active investors is the consistent presence of extremely broad performance dispersion across equity markets. The ability to capture more of the outperformers and avoid the underperformers has a big impact on investment performance. Even in 2022, with the S&P 500 down 18%, the top 25% performers in the index recorded an average profit of 22%.

Hortz: How can active management best perform in those market environments?

Pellegrinelli: We believe that using advanced technology to discover factual insights and access better market intelligence makes a big difference. It’s knowing what the difference is between information that makes sense and information that makes money. Knowledge of what works and what is useless is the foundation of successful investment strategies.

The key is in determining the investment rules, parameters, and price trends that can best capture the outperformers and avoid the losers that always occur in equity markets. In order to do so, professional investors need and deserve the best possible information flow, with real value added, based on fact-finding, historical validation, and respect for price trends.

Hortz: How can managers uncover the most effective investment selection parameters?

Pellegrinelli: The answer is in fact-finding. Working on assumptions, ideas, and opinions that lack sound, documented evidence of the true value in capturing alpha is unsafe and risky. The ability to run a rigorous historical test and validate the parameters and the rules governing an active investment strategy is wise. Advanced technology makes it possible to run rigorous historical tests and assess the actual contribution to performance of any investment rules that one is used to implementing.

For example, it is interesting to discover the differential across diverse fundamental parameters in any market and sector. It is also possible to explore any combination of rules across fundamental, quantitative, and technical analytics and discover the winning mix in delivering superior returns in a consistent way across market cycles.

Leveraging investment technology can help you discover what you can trust to perform. Knowledge of hard facts is gold and avoids the traps of assumptions. Ignoring where real value lies is a recipe for underperformance.

Hortz: Any useful guidelines to validate and execute this investment selection process?

Pellegrinelli: We recommend running a robust 10-year test and combining the most productive fundamentals with trend validation metrics to select only good companies that are also good stocks. Good stocks can be determined through running research for advanced fundamental alpha discovery combined with price trend capture analytics, uncovering factual insights and market analytics with a measurable impact on performance.

The performance dispersion across stocks is a great opportunity for active investors to beat the benchmarks in any market cycle, if they use the right information flow to unveil factual insights that have substantial, documented value. Performance dispersion is always at work and selected stocks with strong validated price trends will have a higher likelihood of posting gains.

Hortz: What is your formula for maximizing investment performance? 

Pellegrinelli: Use a rigorous research testing platform that combines fundamental intelligence with real-time price trend validation and capture:

Fundamentals Intelligence – learn which fundamental parameters work best providing a potential performance differential of 10%.

Trend Validation – respect & exploit price trends to maximize returns. Trend dispersion magnitude can be above 20%.  

Our Strategy Builder tool and AI assistant can help you discover the best investment parameter mix for alpha generation, create your selected lists using our real-time price trend analytics, and build your model portfolios.

We currently invite and offer managers extended free trials to demonstrate and prove with facts how our advanced AI price trend analytics and alpha discovery research platform can provide enhanced market intelligence, strengthen risk management, and improve investment performance for any manager, using any investment methodology.

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.