What the charts show about investing going into 2026, top holiday toy shopping trends

Key Concepts

• Market Performance: Analysis of major indices (Dow Jones, Nasdaq Composite, S&P 500, Russell 2000) performance, including daily, monthly, and year-to-date gains/losses.
• Sector Rotation: Shift in investor preference from technology to sectors like healthcare, materials, and consumer staples.
• Mag Seven Performance: Mixed performance of large technology companies, with some showing gains (Alphabet, Broadcom) and others lagging (Nvidia, Microsoft, Amazon).
• Cryptocurrency Market: Bitcoin's performance in November, including its month-to-date decline and recovery from recent lows.
• Commodities Market: Movement in crude oil and Brent crude, with a specific focus on gold's significant gains and proximity to all-time highs.
• Technical Analysis: Examination of long-term market trends, resistance levels, and the impact of seasonality on market movements.
• Intergenerational Play: A trend in the toy market where toys facilitate shared activities between different age groups.
• Small Business Support: The importance of Small Business Saturday and strategies for consumers and businesses to support local economies.
• Economic Indicators: Upcoming releases of key economic data, including PCE inflation and auto sales.
• Corporate Earnings: Anticipated earnings reports from major companies like Salesforce, Dollar Tree, and Dollar General.

Market Performance and Sector Rotation

The closing bell marked the end of a trading day with major market averages showing gains, extending winning streaks to five consecutive days for the Dow Jones, Nasdaq Composite, S&P 500, and Russell 2000. This trend is projected to continue, potentially reaching six or seven months of gains for many of these indices.

Monthly Performance (November):

• Dow Jones: Eked out a gain.
• S&P 500: Eked out a gain.
• Nasdaq Composite: Down 1.5%.

A significant sector rotation was observed in November, with a shift out of technology and into healthcare. Other top-performing sectors for the month included materials and consumer staples. This rotation is linked to the performance of the "Mag Seven" companies.

Mag Seven Performance (Month-to-Date):

• Alphabet: Up 13%
• Broadcom: Up 9%
• Apple: Up 3%
• Nvidia: Down 12% (lagged)
• Microsoft: Lower for the month
• Amazon: Lower for the month

Cryptocurrency and Commodities

The cryptocurrency market experienced a downturn in November. Bitcoin was trading around $91,000, down 14% month-to-date. However, it has recovered from its April lows of approximately $81,000.

In the commodities market, crude oil and Brent crude saw a 1% increase. Gold showed significant strength, trading at $2,050 per ounce, less than 5% off its all-time high. Gold has achieved its fourth consecutive month of gains, with a year-to-date increase of nearly 60%. Michelle Schneider has set a target of $2,400 for gold.

Technical Analysis and Long-Term Trends

Rob Slimer, Technical Strategist at RBC Wealth Management, provided insights into long-term market trends. The structural uptrend of the S&P 500 since the 2009 lows remains intact. However, the market is approaching the upper end of its trend channel, with significant resistance around 6960, close to recent highs. The upper end of this channel is estimated to be around 7,000.

Key Technical Considerations:

• Valuation Concerns: Investors are concerned about high valuations as the market nears the upper range of its trend channel.
• Caution Advised: While not a signal for negativity, the current technicals suggest a need for more caution, stock selectivity, and sector selectivity heading into the new year.

December Seasonality: December is typically characterized by lower volatility and the potential for a "Santa Claus rally." While seasonality is a helpful backdrop, current technicals are paramount. Recent de-risking in November has pushed many stocks into oversold territory. Daily trading indicators (tracking 2-4 week moves) are coming off bottom levels, suggesting potential for further upside in the first half of December.

Critical Levels: The market needs to push through recent highs around 6920 on the S&P 500. Market breadth is showing signs of improvement, which could support this upward movement.

Sector Opportunities and Rebalancing

Technology and Growth Stocks: Despite high valuations and some rocky performance, technology and growth stocks are expected to maintain their dominant leadership position, a trend in place since 2006. It is considered premature to declare a long-term technical rollover for the tech sector.

Portfolio Rebalancing: Given valuation and technical concerns in some growth stocks, rebalancing portfolios is recommended.

Underperforming Sectors Showing Potential:

• Healthcare: Experienced a strong November and is showing bottoming patterns. Biotech has broken out of trading ranges, medical technology is improving, and pharmaceuticals are showing signs of bottoming. Diversification into healthcare is advised for the first half of 2026, with potential pullbacks after recent gains.
• Oil Service: This sector, which has been in a bear market for 2-3 years, is showing signs of bottoming, making it an interesting area for contrarian investors, despite forecasts for oil.

International Markets: While many international markets have outperformed the US in absolute terms this year, they are not outperforming on a US dollar-adjusted basis. Their long-term relative performance against the S&P 500 remains in downtrends. While opportunities exist, caution is advised against overweighting these markets.

Election Year Volatility: Historically, election years can see corrections of around 20%. Investors should be prepared for increased volatility in the coming year, reinforcing the importance of a diversified portfolio.

Toy Trends and Holiday Shopping

Toy Spending: Despite economic uncertainty and inflation, consumer spending on toys is projected to increase by 7% in 2025 compared to the previous year, even before the holiday season. However, inflation and tariffs are causing shoppers to cut back on discretionary spending, with toy spending lagging behind necessities like groceries.

Intergenerational Play: This is a significant trend, with families seeking activities to enjoy together.

• Trading Cards and Games: Pokémon is leading this category, especially with its upcoming 30th anniversary. Parents are sharing this excitement with their children.
• Building Sets: LEGO remains a top seller for both adults and children, with sets designed for teens and adults, such as the Lego Game Boy and Formula 1 race cars.

Inventory Concerns: While shelves are not expected to be empty, there is limited inventory on particular products. Consumers are advised to purchase desired toys immediately if they see them, as waiting for lower prices might result in missing out.

Retailer Performance:

• Walmart: Toys are driving sales, with consumers seeking budget-friendly options.
• Target: Saw nearly 10% growth in toys, attracting consumers looking for newness, trends, and exclusive products.
• Local Toy Stores: Recommended for their expertise in helping shoppers find the right gifts.

Toy Manufacturers:

• Hasbro: Benefits from toys based on popular characters like Marvel and Star Wars.
• Mattel: Strong brands include Hot Wheels and Barbie.
• LEGO: Continues to be a significant sales driver.

Small Business Saturday and Support

Small Business Saturday: 86% of consumers plan to shop small during the holiday season. Small businesses are crucial for Main Street economies. Despite recent low sentiment due to high capital costs and tariff uncertainties, small businesses are considered the most trusted group in America.

Strategies for Small Businesses:

• Marketing Campaigns: Utilizing viral campaigns and celebrity endorsements.
• Technology Adoption: Employing new software and AI, including "Buy Now, Pay Later" options like PayPal's program.
• Online Presence: Leveraging platforms like Amazon's "small business sellers" button and Shopify for shipping.

Finding Small Businesses:

• AI Tools: Using AI like ChatGPT to search for local small businesses based on location and product type.
• Online Marketplaces: Exploring platforms that highlight small business sellers.
• Local Focus: Supporting businesses in one's community.

Navigating Tariffs and Inventory:

• Supply Chain Challenges: Tariffs and supply chain issues remain significant challenges.
• Diversification: Businesses that have diversified their sourcing or kept production local are better positioned.
• Consumer Patience: Consumers are asked for patience as businesses may need to pass on increased costs to remain viable.

Shopping Small for Thanksgiving:

• Food Production: A significant portion of food production and groceries comes from small businesses.
• Local Caterers and Corner Stores: Supporting these businesses for holiday meals and supplies.

Upcoming Economic Data and Earnings

Earnings Reports:

• Salesforce: Expected to report solid growth and steady demand, with the Informatica acquisition potentially boosting revenue by $1.7 billion. However, increased spending on its AI product could impact profit margins.
• Dollar Tree and Dollar General: Value retailers' earnings will be closely watched.

Economic Data:

• Personal Consumption Expenditures (PCE): The Fed's preferred inflation gauge is expected to hold steady month-over-month at 0.3% for total PCE and 0.2% for core PCE, indicating continued but stable consumer price increases.
• Auto Sales: Anticipated to reach 15.4 million for November, a slight positive uptick in demand for new vehicles.