Editor’s Note: Today, we’re sharing a guest essay from Marc Chaikin, founder of Wide Moat Research’s corporate affiliate Chaikin Analytics. Marc has 50 years of experience in the markets as a trader, stockbroker, analyst, and head of the options department for a major brokerage firm. Today, he shows why we’re living in an era of “headline risk,” with big swings happening as a result. But looking beyond the headlines, Marc sees opportunity… if investors have the right strategy.

The broad market S&P 500 Index isn’t far from all-time highs…

On Wednesday, it hit a record closing high of 6,144.15. Right now, the index is only down about 1.8% from that level. And it has gained roughly 2% so far in 2025.

But over the past month, some unsettling developments have caused big volatility in stocks…

One was the turmoil surrounding Chinese artificial-intelligence (“AI”) startup DeepSeek. The company announced breakthrough speed and cost advances in AI.

Another development was a series of tariff announcements from President Donald Trump.

And another was the arrival of Elon Musk and his Department of Government Efficiency (“DOGE”) cost cutters inside the federal government.

Looking ahead, there are still plenty of uncertainties regarding the economic impact of President Trump’s tariff initiatives and their effect on inflation rates.

The next few months will see a tug-of-war between a strong economy and the shifting sands of U.S. monetary, fiscal, and tariff policies. That will challenge the resolve of this bull market.

Put simply, we’re in a time of what I call “headline risk.” And I expect to see continued big swings in the market as a result.

But as I’ll explain, I’m still “bullish” on stocks. In fact, my target for the year sees another 11% gain in the S&P 500 from here…

The Real Story

Despite all this uncertainty, the market has performed well.

Stocks have rallied from their January lows. And it happened without the mega-cap stocks leading the way… with the exception of Meta Platforms (META). The stock has jumped an incredible 16.8% since mid-January.

Strong fourth-quarter earnings reports have fueled a good part of the rally. And the Federal Reserve Bank of Atlanta’s GDPNow forecast of 2.9% first-quarter GDP growth has also helped.

But recent data from the Institute for Supply Management (“ISM”) is the real story…

The ISM Manufacturing Index rose to 50.9 in January. That’s the first expansion in the factory sector after 26 months of contraction.

Even more “bullish” for stock prices is the ISM New Orders Index spiking above 55. This is the highest level in almost three years.

An expanding manufacturing sector is “bullish” across the board for stocks.

Historically, this has been a great sign for the S&P 500. According to SentimenTrader.com, looking out six and 12 months, the index has posted median gains of 6% and 12%, respectively… with 80% positive results.

And it’s particularly “bullish” for mid- and small-cap stocks.

Keep in mind that corporate buybacks totaled more than $900 billion in 2024. And they’re expected to exceed $1 trillion this year. That’s a big demand tailwind for stocks.

Putting it all together, I remain “bullish” on the stock market…

I’m looking for the S&P 500 to approach 6,800 in 2025. That’s roughly 11% above current levels.

The extreme volatility over the past two months has created numerous “buy the dip” opportunities… but only if you ignore the headlines.

Good investing,

Marc Chaikin

Editor’s Note: Recently, Marc released a presentation where he unveiled a surprising prediction. It has nothing to do with the Fed or the new Trump administration. It all has to do with a big monetary shift unfolding right now. And Marc believes it will impact where you’ll want to have your money.

And because of this shift, Marc is coming forward with a new strategy that’s been 50 years in the making, one that he says could be the No. 1 most lucrative in the market.

If you’re at all curious, get the full story from Marc right here.