Technology Stocks Poised for Another Six-Month Rally, Says Market Analyst
December 9, 2025
In a recent analysis published on Seeking Alpha, market forecaster Michael James McDonald predicts a significant advance in technology and artificial intelligence (AI) stocks over the next six months. Despite current high valuations, bearish investor sentiment and option market activity suggest that a powerful upward wave may be imminent.
Investor Sentiment Points to Rally
McDonald, an experienced stock market forecaster and author known for his focus on investor psychology, highlights an unusual situation in technology shares. While prices approach recent highs, bearish positioning—such as increased short selling and directional put option buying—has surged. Historically, such conditions emerge just before strong rallies in tech stocks.
“Too many investors expecting a stock to rise often leads to price declines, and vice versa. The key to forecasting market moves is to identify when sentiment reaches extremes,” McDonald explained. In this case, elevated bearish bets amid robust price levels indicate an opportunity for upside.
Sentiment Over Valuation in Bubble Markets
The analyst emphasizes that in markets exhibiting “bubble-like” characteristics, traditional valuation metrics may not be reliable indicators of near-term price direction. Instead, sentiment gauges provide more actionable insight. McDonald expects the current environment to produce a second substantial advancing wave in technology stocks, potentially delivering gains of 60 to 70 percent by summer 2026. Background of the Analyst
Michael James McDonald has long been an advocate of analyzing the contrary opinions of investors and the measurement of psychological sentiment to predict stock market trends. His early work, including his 2000 book "A Strategic Guide to the Coming Roller Coaster Market," accurately anticipated the end of the dot-com bull market. He is also the founder of The Sentiment King, a firm dedicated to studying investor psychology for more effective market forecasting.
Disclosure
McDonald holds long positions in the XLK ETF, which tracks technology sector stocks, and authored the article independently without compensation beyond that received from Seeking Alpha. As with any investment, past performance is no guarantee of future results, and investors should consider their own financial situation before making decisions.
Conclusion
The prevailing bearish sentiment in technology and AI stocks, combined with recent option market dynamics, presents an unusual and potentially bullish setup. Investors and market watchers may want to monitor this sector closely, as a substantial rally could be unfolding over the coming months according to McDonald’s analysis.
