The S&P 500 index had another successful year last year, with yet another consecutive period of YOY growth. Now in 2026, a key metric has emerged that signals even strong growth for the index. Indeed, analysts have pointed out the Dow Theory, a bullish pattern, is in effect, and can boost the index’s prospects this year.

The Dow Theory is a technical analysis theory that suggests the direction of the stock market can be predicted using the movement of market averages. In particular, the theory focuses on the Dow Jones industrial average and the Dow Jones Transportation Average. On Tuesday, both the DJIA and the DJT secured new record highs for the first time in over a year. Analysts view this feat as a bullish signal for the S&P 500, as the index has seen growth 77% of the time that this Dow theory takes effect.

In addition, many experts on Wall Street envision January 2026 as a bullish month for most top stocks. Nvidia and Intel (INTC) are already on a role, and other magnificent 7 stocks are also on the rise since the new year. For 2026, Wall Street’s price targets for the S&P 500 range from 7,100 to 8,100. All of the estimates imply upside from its 2025 close of 6,845.

Furthermore, When the S&P 500 has gained at least 15% in a year, the following year’s returns have averaged about 8%, according to Adam Turnquist, chief technical strategist at LPL Financial. The S&P in those years had an average decline of roughly 14% at some point before rebounding and climbing higher. It’s a reminder that stock market gains are not always straightforward, Turnquist said.