MARKET UPDATE
Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Nicole Brown-Griffin, CFP®, CDFA®, EA
Aaron Petty, Client Associate
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A Strong — and Bumpy — Start to 2026
TLDR (Too Long Didn’t Read):
Markets entered 2026 with strong momentum, even as normal volatility has begun to reappear. Shortterm pullbacks and milestone “tests” — like what we are seeing around S&P 7,000 — are a normal part of bull market progression. History consistently shows that disciplined investors who stay aligned with longterm plans are typically rewarded. We remain focused on strategic positioning, diversification, and taking advantage of opportunities created during periods of uncertainty.
Okay, now for a more in-depth perspective…
A Strong — and Bumpy — Start to 2026
Despite mid-month Greenland-related volatility, U.S. stocks rallied in January, with the S&P 500 and Russell 2000 gaining approximately 1.5% and 5.4%. International stocks remained strong, with developed and emerging markets advancing roughly 5.2% and 8.9%. As a reminder, over the past several months, we have intentionally increased international exposure across our managed strategies as part of our long-term diversification approach.
Over the past several days, markets have experienced additional volatility that can understandably make investors uneasy. It is natural to want to step aside and wait for things to feel more stable. However, history consistently shows that volatility is a normal and expected part of long-term investing — not a signal that something is fundamentally broken.
Markets rarely move in straight lines. Volatility is not new. Each year carries the potential for meaningful corrections. Since 1980, the S&P 500 has experienced an average intra-year decline of approximately -14%. Yet many of those same years still finished positive. History has consistently shown that investors who stayed the course were rewarded more often than not.
One of the biggest risks investors face is making two difficult decisions back-to-back: when to exit and when to re-enter. Many of the market’s strongest recovery days tend to occur during periods of uncertainty, making them easy to miss when sitting on the sidelines.
Our focus remains on your long-term plan, not shortterm headlines. Your portfolio is built intentionally — designed to participate in growth over time while managing risk through diversification, asset allocation, and disciplined rebalancing. Periods like this are exactly why portfolios are built this way.
The Wealth Avenue Navigation Map
Given the backdrop of multiple strong positive years, all of which included volatility along the way, this is a good time to revisit what we call your Wealth Avenue Navigation Map.
The cornerstone of how we manage your portfolio is aligning it with a holistic plan that supports your goals — whether that means retirement confidence, wealth growth and preservation, tax efficiency, family protection, or legacy planning. We believe disciplined behavior is just as important as sound strategy. Portfolio success depends not only on structure, but also on consistency.
Our Navigation Map helps guide decisions during uncertain markets by focusing on core principles:
- Maintain a long-term perspective — short-term fluctuations are inevitable.
- Diversify — spread risk across asset classes.
- Stay aligned with your Investment Comfort Path — balancing financial goals and emotional tolerance.
- Rebalance systematically — keeping portfolios aligned and opportunistic.
- Use dollar-cost averaging — investing consistently through all market environments.
- Reinvest income — harnessing long-term compounding.
- Maintain appropriate liquidity — protecting long-term strategy from short-term needs.
- Avoid market timing — success requires being right twice, which is rarely sustainable.
- Practice emotional discipline — your plan is built for you, not headlines.
- Stay educated and informed — through communication, strategy sessions, and updates.
This process is reinforced through our Investment Committee, ongoing strategy sessions, and proactive communication as life and market conditions evolve.
Technically Speaking: S&P 7,000 — Why Markets Test Levels Before the Next Leg Higher
The S&P 500 reaching 7,000 is a major market milestone that we are closely watching. These types of milestone levels often act as psychological checkpoints for investors, but history shows markets rarely move cleanly through them on the first attempt. Instead, markets typically test these levels, pull back, and retest before ultimately establishing them as new support. While these periods can feel uncertain in real time, they have historically been a normal and healthy part of bull market progression and often help reset positioning before the next leg higher.
The S&P 500 briefly crossed 7,000 during intraday trading last month but has since retraced and has been “flirting” with this level for the past few weeks. We are seeing similar behavior in the Dow Jones Industrial Average as it approaches the 50,000 milestone, another example of how markets tend to pause around major round numbers.
If we take a step back in time, we see similar patterns. When the S&P 500 first approached 3,000 in 2019, it tested the level multiple times over several months as trade tensions and global growth concerns created volatility. The market briefly moved above 3,000 mid-year, pulled back, and then ultimately held above that level later in the year before moving higher into early 2020. The key takeaway was that confirmation came after multiple tests, not the first breakout, similar to what we are experiencing now.
A comparable pattern occurred around 4,000 in early 2021. The market approached 4,000 quickly during the post-pandemic recovery. While the testing period was shorter than at 3,000, there were still pauses and consolidation before the market continued higher. Strong earnings growth and economic reopening trends ultimately supported the move and helped establish 4,000 as a durable support level.
As market momentum accelerated in recent years, the time spent testing milestones has shortened. It is also important to remember that each 1,000-point move requires a smaller percentage gain as the index rises — for example, moving from 3,000 to 4,000 required about a 33% increase, while moving from 4,000 to 5,000 required about 25%. Around 5,000 in early 2024 and 6,000 in late 2024, the market moved through these levels relatively quickly, with only brief consolidation, reflecting strong earnings growth and concentrated stock leadership driving returns.
We are seeing similar behavior today around 7,000. The S&P 500 demonstrated the ability to touch 7,000 intraday on January 28, even though it has yet to consistently hold that level. Sustained closes above 7,000 would signal broader conviction and could support the next phase of market momentum.
From a portfolio management perspective, this reinforces our long-term philosophy: stay aligned with your plan, maintain diversification, and continue investing systematically rather than reacting to short-term noise.
In Closing
If recent market movement has you asking questions or wanting to revisit your strategy, we welcome that conversation. Our role is to help you filter through noise, stay grounded in your plan, and make thoughtful decisions aligned with your long-term goals.
With sound strategy in mind, our response to volatility is disciplined and intentional — continuing to invest, dollar-cost average, and take advantage of opportunities, even when headlines or emotions suggest the opposite.
Thank you, as always, for your continued trust and confidence in us.
Your Team at Wealth Avenue,
P.S. It’s also important to be clear about what these principles are — and what they are not. Asset allocation and diversification are designed to help manage risk and smooth the investing experience over time, but they cannot eliminate risk or guarantee profits during market declines. Similarly, strategies like dollar-cost averaging and rebalancing are long-term disciplines, not short-term solutions and investors require the ability to stay invested through periods of volatility and may involve transaction costs or tax costs associated with them.
These tools work best when used intentionally, consistently, and within the context of a broader financial plan tailored to your goals, time horizon, and comfort with risk.
