Hey, Traders,

If you’ve been watching the news lately, you’ve probably heard the words “midterm election” thrown around a lot. 

That’s because November 2026 marks the midpoint of the current president’s term, a cycle that happens every four years. 

The uncertainty of the midterm election can cause big shifts in market sentiment, and when emotions run hot, opportunity usually isn’t far behind. 

Plus, markets hate guessing, so stocks often sell off at some point before the election. 

It’s also not unusual to see meaningful pullbacks during midterm years, as investors pause to see how things will shake out. 

Fear creeps in, short sellers grow more confident, and pessimism builds.

But once the election is over, things can change quickly. 

The second half of midterm years has historically produced some of the strongest rallies because of the clarity they bring. 

In past midterm years, I’ve seen stocks get pushed far lower than they ever should have been, only to snap back once sentiment changed. 

That snapback is where aggressive traders can make gains.

By preparing for this predictable cycle, you can come out on the winning end, too. 

Let’s talk about how to do that. 

A Feeding Frenzy

This is where short squeezes come into play, and why 2026 has my attention. 

A short squeeze happens when too many traders bet against a stock and get caught on the wrong side of it. 

When a stock starts moving higher, those traders are forced to buy shares to close their positions. That buying pressure pushes prices even higher and feeds on itself even more. 

When it starts, it can move fast.

We’ve all seen this before with names like GameStop Corp. (NYSE: GME), which experienced lots of volatility in 2022. 

The stock became explosive because positioning was too crowded on the short side:

Once momentum took over, short sellers had no easy exit. 

I traded those periods aggressively, and catching even part of a move like that can change your entire year.

Here’s an image from my mentor, Tim Sykes, showing how I’ve taken advantage of recent midterm years in my trading:

The Real Money

Looking toward November 2026, conditions feel familiar. 

Institutions are already talking about rotation into beaten-down stocks and names with heavy short interest. 

If liquidity stays in the system and earnings improve in certain areas of the market, it won’t take much to trigger broad short covering. 

One surprise catalyst, such as earnings, guidance, or a macro shift, could flip sentiment overnight.

That’s why I respect midterm years. 

Volatility creates opportunity, and when everyone is leaning in one direction, the trade is often in the other direction. 

If a short squeeze shows up in 2026, it will likely be fast, emotional, and unforgiving for anyone caught on the wrong side. 

Those are the moments I prepare for, because that’s where real gains are made.

Stay focused,

Jack