Huge Volatility to Define 2026: What’s Working & What’s Not?

This week’s update at a glance

• Volatility isn’t random. The speed of change (especially in tech) is forcing markets to reprice faster than the narrative can keep up.
• Fundamentals can lag at pivotal points. In fast rotations, price and money flow often move first, with the fundamentals confirming later.
• A bifurcated market is creating opportunity. Parts of the market are trending up strongly while others are being marked down aggressively, often “just in case”.
• The practical response is simple. Do more of what’s working, less of what isn’t, and avoid low probability behaviour like trying to pick bottoms.

What you’ll learn

• Why markets can “jump at shadows” when forward expectations are changing quickly.
• How to stress-test your portfolio by reviewing the weekly trend of every household name you own.
• How to think about great businesses that are falling: you don’t have to avoid them, but you do need the right ownership approach.
• Where leadership is showing up now (and what’s breaking down).
• Why index-level moves can look “modest” while individual stocks are extremely volatile.

The thinking shift (in plain English)

When volatility rises, most investors look for a story to make them feel certain. That’s understandable, but it’s also where people get trapped. The market is forward-looking, and when the pace of change accelerates, the narrative can lag badly.

So the strategy is to simplify: focus on the weekly trend, respect where the money is flowing now, and adjust weightings accordingly. Fundamentals still matter for the longer term, but timing and risk management matter more when markets are repricing quickly.

What history shows

Markets have a habit of overshooting in both directions. In the “marked down” areas, that can mean deeper drawdowns than most people expect, even in quality names. In the leadership areas, it can mean trends last longer than the consensus believes is “reasonable”.

The takeaway is not prediction. It’s process: avoid guessing bottoms, avoid getting married to favourites, and keep capital aligned with strength.

Where I’m focused now

• Overweight strength: sectors and stocks in sustained uptrends (where momentum and volume confirm demand).
• Underweight breakdowns: especially areas being repriced on AI uncertainty and margin-compression fear (software, cloud and similar).
• Rotation awareness: when leadership shifts, indices can hide it. The opportunity is in the dispersion.
• Organisation and discipline: this is a high-opportunity market, but it won’t feel “easy” because the moves are abrupt.

Important information

_{Any advice in this video is general advice only. Neither your personal objectives, financial situation or needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Garry Davis (AR No:317590) is an authorised representative of Primary Securities Ltd (AFSL No. 224107).}

_{Note to traders* The publishers of this article/information/promotion wish to disclose that they may hold stocks mentioned in their portfolios and that any decision to purchase any stock should be done so after the purchaser has made their own enquiries as to the validity of any information in this article/information/promotion...}

To receive notification when my weekly update is posted, fill out the form on this page or subscribe to my YouTube channel.