Why Interactive Brokers' Sosnick is cautious about the S&P's 2026 target

Market Outlook - The S&P 500 year-end target for 2026 is set at 6,500, reflecting a contrarian view amidst various market factors [1] - Historical patterns indicate caution during second-year presidential terms, with only two bear markets occurring in the last 15 years during such periods [2] - New Federal Reserve chairs often face challenges in their initial years, which could impact market stability [3][4] AI and Market Dynamics - The reassessment of the AI trade, which has significantly influenced market performance, suggests potential volatility if leading companies experience pullbacks [5][6] - Broadcom's recent earnings report exemplifies this dynamic, as despite positive results, the stock fell significantly, indicating market sensitivity to expectations [7][8] Trading Trends - Pre-market trading trends show a pattern where traders buy weak futures in anticipation of a rally at market open, often leading to a lack of follow-through [9] - The potential for a Santa Claus rally is noted, as the absence of institutional sellers during the holiday period may support market gains [10]