The Stock Market Has Done This 7 Times Since 1990. It Signals a Big Move in 2026, Historically Speaking.

The Nasdaq Composite (NASDAQINDEX: ^IXIC) is one of three major U.S. stock market indexes. It tracks about 3,300 stocks listed on the Nasdaq Stock Exchange, many of which come from the technology sector.

The Nasdaq Composite has returned at least 20% in three consecutive years, adding 43.4% in 2023, 28.6% in 2024, and 20.3% in 2025. History says the growth-focused index could extend that streak in 2026 as the seventh bull market since 1990 continues.

Here's what investors should know.

Image source: Getty Images.

History says the Nasdaq Composite will return 30% by April 2027

The Nasdaq Composite peaked at 20,173 on December 16, 2024. After trading sideways for a few months, the index fell into bear market territory when President Donald Trump began announcing tariffs. It closed more than 24% below its record high on April 8, 2025. In hindsight, that low point was the beginning of a new bull market, the Nasdaq's seventh bull market since 1990.

To elaborate, while a bull market technically starts when a bear market reaches bottom, the beginning of a bull market is recognizable only in hindsight because the index must satisfy two conditions: (1) It must increase 20% from the previous bear market low, and (2) it must hit a new record high.

The Nasdaq has satisfied both conditions since bottoming last April. The technology-heavy index has added 54% since the current bull market began, and history suggests it will climb much higher before the bull market ends. The chart below provides details.

Data source: YCharts.

As shown above, the Nasdaq returned an average of 281% during the last six bull markets and realized those returns over an average of 1,817 days (about five years). That means the index has compounded at 31% annually during bull markets since 1990.

Not shown in the chart, the Nasdaq has returned an average of 71% during the first year of a bull market, and it has returned an average of 17% during the second year. With that in mind, the index closed at 15,268 when the current bull market began on April 8, 2025, which means:

• The Nasdaq will advance 71% to 26,108 by April 8, 2026, if its performance matches the historical average. That implies 11% upside from its current level of 23,515.
• The Nasdaq will advance another 17% to 30,546 by April 8, 2027, if its performance matches the historical average. That implies 30% upside from its current level of 23,515.

Collectively, those data points portend strong returns in 2026, though readers should bear in mind the usual caveat: Past performance is never a guarantee of future results. That said, technology stocks are likely to perform well as businesses continue to spend heavily on artificial intelligence, which supports the notion that the Nasdaq bull market could carry on for several years.

Investors can get exposure to the Nasdaq with two index funds

Investors who want exposure to the Nasdaq Composite have two good options. First, the Fidelity Nasdaq Composite ETF (NASDAQ: ONEQ) basically tracks the full index. The fund returned 1,120% (or 13% annually) over the last two decades, and it has an expense ratio of 0.21%, which means shareholders will pay $21 per year on every $10,000 invested.

Second, the Invesco QQQ ETF (NASDAQ: QQQ) tracks the Nasdaq-100 index, which tracks the top 100 nonfinancial companies in the broader Nasdaq Composite. The fund returned 1,580% (or 15% annually) over the last two decades, and it has an expense ratio of 0.18%, which means shareholders will pay $18 per year on every $10,000 invested.

You might assume the Invesco QQQ Trust is more concentrated because it tracks only 100 companies, but the opposite is actually true. The Nasdaq Composite is simply weighted by market value, while the Nasdaq-100 is weighted by market value with certain modifications. Specifically, the aggregate weight of companies whose weights exceed 4.5% can't exceed 48%.

What does that mean? The Nasdaq Composite and the Nasdaq-100 have the same top five holdings, but they are weighted differently. The chart below provides details.

Data source: Nasdaq.

As shown above, the top five holdings account for 46% of the Nasdaq Composite (and the Fidelity Nasdaq Composite ETF), while the same five holdings account for just 36% of the Nasdaq-100 index (and the Invesco QQQ ETF). To that end, I think the Invesco QQQ ETF is the better option -- the fund is less concentrated, outperformed over the last two decades, and has a lower expense ratio.

Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.