{"id":25952,"date":"2025-12-16T07:30:00","date_gmt":"2025-12-16T12:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=25952"},"modified":"2025-12-10T09:58:55","modified_gmt":"2025-12-10T14:58:55","slug":"a-tipping-point-for-the-ai-boom-is-coming-in-2026","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/a-tipping-point-for-the-ai-boom-is-coming-in-2026\/","title":{"rendered":"A \u201cTipping Point\u201d for the AI Boom Is Coming in 2026"},"content":{"rendered":"
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Managing Editor’s Note: <\/strong>In just a few hours, during the “Tipping Point 2026” event, Marc Chaikin and Keith Kaplan will get into details on why Marc’s calling 2026 the Year of the Bear – including the four-year cycle that’s played out over more than a century.<\/p>\n

They’ll demonstrate how you can use Tradesmith’s newest investment tech to protect yourself from any surprises.<\/p>\n

Make sure you don’t miss it by signing up right here<\/a>, then read on for more…<\/p>\n<\/div>\n

A “Tipping Point” for the AI Boom Is Coming in 2026<\/h2>\n

BY KEITH KAPLAN, CEO, TRADESMITH<\/strong><\/p>\n

Nothing seduces investors quite like a New Era.<\/p>\n

In the Roaring ‘20s, it was the dizzying cocktail of electrification, automobiles, radios, aviation, and mass production. Productivity soared. Stocks soared with it.<\/p>\n

Leading economists of the day argued that technology and modern management had tamed recessions. Investors believed a permanent boom had arrived.<\/p>\n

Then the 1929 Crash hit… and they were plunged into the worst bear market in history.<\/p>\n

In the 1960s, another New Era dawned – this time with the rise of computing, electronics, and aerospace.<\/p>\n

Brokers told their clients that the Nifty Fifty – a group of 50 fast-growing blue chips – were so great you could buy them at any price. Believing we’d entered a long, unstoppable technological renaissance, they called them “one-decision stocks.”<\/p>\n

By the mid-1970s, many of the Nifty Fifty stocks had fallen 60% to 80%.<\/p>\n

Then in the late 1990s, New Era thinking returned again. This time, it was inspired by the rollout of the commercial internet.<\/p>\n

It was the fastest boom of the century. Brokers told their clients that traditional valuation metrics no longer applied in the new digital economy. And dot-com stocks with no profits became billion-dollar tickers overnight.<\/p>\n

In March 2000, stocks peaked, the bubble burst, and the tech-filled Nasdaq dropped almost 80% over the next two years.<\/p>\n

Different decades. Different technologies. Different New Eras. But each ended the same way: with a “tipping point” nobody saw coming until it was too late.<\/p>\n

Today, we find ourselves in another New Era – this time driven by eye-widening advances in artificial intelligence (AI). Once again, stocks are minting millionaires. And millions of investors believe they’re living through an unstoppable boom driven by a world-changing technology.<\/p>\n

I’m NOT telling you this because I believe stocks are going crash tomorrow. But despite the dizzying gains from AI stocks like Nvidia and Palantir, you need to understand that New Eras don’t last forever. Eventually, each one reaches a tipping point, and stocks thump back to Earth without much warning.<\/p>\n

It’s why my team and I built a new way to safeguard your wealth. It’s an innovation in investment tech that could save you a world of pain – and tens of thousands of dollars in potential losses – when we reach the next tipping point.<\/p>\n

And as you’ll see today, the tipping point for the AI boom could come as soon as next year.<\/p>\n

First, it’s important you understand why market moves are speeding up and why you need a new kind of indicator to warn you ahead of these moves.<\/p>\n

Bigger, Faster, More Online <\/h2>\n

Outside of the 2008 financial crisis, the 10 biggest daily percentage moves in the S&P 500 over the past 30 years have all occurred since 2020.<\/p>\n

Partly, that’s due to shrinking holding times.<\/p>\n

In the late 1950s, investors typically held stocks for about eight years. By 2020, the average holding time was 5.5 months. <\/p>\n

And there are now more retail investors in the market than ever before.<\/p>\n

Before the COVID lockdowns, retail trading made up about 10% of U.S. stock trading volume. That doubled to about 20% in 2020… and reached as high as 26% in the 2021 pandemic boom.<\/p>\n

These are not pension fund managers weighing valuations, balance sheet growth, and long-term industry trends. Most of these folks are rookies reacting to social media posts.<\/p>\n

They also move in packs based on instructions from “gurus” in online message boards where millions of anonymous users swap stock ideas, brag about wins, and egg each other on to make riskier trades.<\/p>\n

Struggling movie theater chain AMC didn’t soar 3,000% in 2021 and then crash because its business changed. Like GameStop before it, it became a meme stock. Millions of highly-online investors piled into its shares to “stick it to the man.”<\/p>\n

When tens of millions of these folks have access to zero-commission, gamified trading, the market doesn’t only get bigger. It gets faster<\/em>. <\/p>\n

And it’s not just human traders who are responsible for these lightning-fast moves. It’s also the algorithms.<\/p>\n

Machines Now Do Most of the Trading<\/h2>\n

The New York Stock Exchange now processes about 1.2 trillion<\/em> buy and sell orders a day – triple what we saw as recently as 2020.<\/p>\n

And computers account for up to 80% of that trading volume.<\/p>\n

High-frequency firms now fire off orders measured in millionths<\/em> of a second. A human can’t even blink that fast. And according to some estimates, more than half of these algorithmic traders are enhanced with AI.<\/p>\n

This creates a new kind of problem. Many of these systems are trained on the same data, learn the same patterns, and react at the same millisecond speeds. So they often make the same decision<\/em> at the same moment<\/em> – especially when they sense danger.<\/p>\n

Think of the market like a packed stadium with only a few doors. If everyone stands up at once to leave, the exits clog and people get crushed.<\/p>\n

That’s what happens when AI trading systems all pull their buy orders at the same time. Liquidity vanishes. Prices don’t fall in steps – they drop straight through the floor.<\/p>\n

We’ve already seen early versions of this.<\/p>\n

In the 2010 Flash Crash, a single automated sell order snowballed into a chain reaction that erased almost $1 trillion in market value. In 2015, an opening-bell volatility burst caused more than 1,000 stocks and ETFs to halt within the hour.<\/p>\n

And in 2020, the NYSE’s “circuit breakers” tripped on March 9, 12, 16, and 18 – each time triggered by a sudden 7% plunge in the first minutes of trading.<\/p>\n

The S&P 500 usually moves about 0.7% to 0.8% a day. Those drops were nearly 10 times larger… and they were happening in minutes. That’s an order-of-magnitude jump in volatility.<\/p>\n

And the next downturn could hit faster, harder, and with even less warning. If you’re relying on traditional indicators to alert you, you won’t keep up. You’ll wake up one morning and find a large hole in your brokerage account.<\/p>\n

That’s why my team and I have created a new kind of sell signal with volatility, tipping points, and bear markets in mind. It’s designed to help you avoid the whiplash-style selloffs that are now routine.<\/p>\n

Introducing Our Early-Warning System<\/h2>\n

Just like the AI-powered algorithms that have overtaken Wall Street… our early-warning system is more reactive than anything we’ve built before.<\/p>\n

It’s sensitive to even the slightest bearish tremor in a stock.<\/p>\n

You can set it up to monitor every stock you follow. If one begins to experience abnormal short-term volatility – an early sign of a steeper drop – our system will automatically alert you.<\/p>\n

In our backtests, you would have been able to get out of:<\/p>\n