We are NOT in a bull market. I unleashed that opinion in the room.
The S&P 500 is not outperforming the price of gold and market breadth is narrow.
Silver’s sprint spells trouble.
There are forces that could brew up a bearish storm in 2026. So, it’s imperative we find the stocks most likely to prosper in that environment.
Most traders chase yesterday's winners.
Smart money filters for tomorrow's.
I spent today cutting through 30 fundamentally strong stocks to find the 10 that actually matter for 2026. Live. No black box. No mystery algorithm.
Even if you watched it happen in real time, you’ll want to comb through the following details because we went fast.
If you weren’t there, that sucks.
The Magic Formula
The Magic Formula system combines two metrics that predict long-term outperformance:
- Earnings yield
- Rturn on capital
Both measure what fundamentally strong businesses actually look like. Not AI.
AI is not fundamentally solid. If markets roil, the AI bubble could collapse hard.
Fundamentals will matter. Professors and textbooks have preached this for years.
But here's what the textbooks don't tell you: Fundamental strength means nothing without technical structure.
A stock can have perfect earnings yield and elite return on capital while trading in a downtrend that destroys your capital. That's why the filtering process matters more than the formula itself.
I walked through every elimination decision in the Ghost Hour:
- Why certain stocks that look perfect on paper get cut
- Which metrics actually predict performance versus which ones create noise
- How to spot institutional accumulation patterns before the crowd arrives.
The 30 stocks that survived the initial fundamental screen all passed minimum thresholds:
- $100 million market cap or higher
- No financials or utilities
- No ADRs
- Strong earnings yield relative to peers
- Return on capital that beats their sector average.
Then came the technical filtering. This is where most fundamental investors fail. They buy value traps. They ignore the price structure. They hold stocks that institutions are distributing while retail keeps buying.
The 10 stocks that made the final cut show both fundamental quality and technical structure. These are names that smart money will rotate into when the current momentum plays exhaust themselves.
Why This System Works
The Magic Formula works because it finds companies generating exceptional returns on their capital while trading at reasonable valuations.
But the original system from Joel Greenblatt's book misses a critical component.
Timing.
You can buy the right stock at the wrong time and still lose money. That's where technical structure creates the edge. Volume patterns revealing accumulation. Price action showing institutional positioning. Support levels that define risk.
Combining fundamental screening with technical confirmation solves the timing problem. You're buying quality businesses when the chart structure confirms smart money is building positions.
This isn't about prediction. It's abtou positioning where probability stacks in your favor.
What Happens Next
These 10 stocks become your 2026 watchlist. Not for tomorrow's trades. For the rotation that develops when growth momentum runs out of steam.
These are the stocks least likely to get hit by a coming debt crisis.
Current market leadership always exhausts. The question isn't whether rotation happens. The question is whether you're positioned ahead of it.
The stocks flashing both fundamental strength and technical structure right now are the names institutions will own six months from today. That's not speculation. That's how capital rotates.
I showed members exactly which 10 stocks made the cut. The fundamental metrics that qualified them. The technical patterns confirming accumulation. The price levels that define entry zones.
The next live Magic Formula session happens in January. I'll walk through the updated screening process. The new stocks entering the watchlist. The technical setups developing in the existing 10.
Register now to see the complete 2026 watchlist.
You don't need complex algorithms. You need clear criteria and disciplined filtering.
That's what separates watching opportunities from positioning ahead of them.
Brandon Chapman, CMT
Creator of Ghost Prints