how can stocks keep going up: drivers & signals

How can stocks keep going up

This article answers the question "how can stocks keep going up" for public equity markets (individual stocks and major indices). It explains the mechanics, historical patterns, the economic and structural drivers that can sustain extended rises, practical indicators to monitor, and investor implications — with neutral, fact-based guidance and suggestions for using Bitget tools to monitor markets.

Quick introduction

How can stocks keep going up? At its simplest: sustained stock advances require a combination of improving corporate fundamentals (earnings), supportive macro and policy conditions (lower discount rates or fiscal support), persistent liquidity and flows into equities (ETFs, passive investing, buybacks), market‑structure dynamics (momentum, derivatives) and upbeat investor psychology. This article walks through each pillar, shows what to measure, reviews recent history (including the 2022–2025 rally and AI‑led gains), contrasts equity rallies with crypto moves, and gives a checklist of indicators investors can track using exchange and wallet tools such as Bitget and Bitget Wallet.

(Note: this is educational content and not individualized investment advice. All data and dates cited reference public reports and industry commentary.)

Overview and key concepts

The phrase "how can stocks keep going up" refers to the drivers and mechanics behind sustained equity price appreciation — the multi‑month or multi‑year bull markets where major indices and many individual stocks trend higher.

Basic price mechanic

• Prices are formed by supply and demand. If buyers persistently outnumber sellers (or sellers are constrained), prices rise. That simple fact underpins every rally.
• Over the short term, prices can move on headlines, momentum trading, or liquidity shocks. Over sustained periods, higher stock prices typically require either greater expected future cash flows (earnings) or a higher multiple placed on those cash flows, or both.

Key dimensions that answer "how can stocks keep going up":

• Fundamentals: rising revenues, margins and earnings-per-share (EPS) growth provide the economic basis for higher valuations.
• Valuation/multiples: P/E, EV/EBITDA, and discount rates can expand if investors accept higher multiples (often when rates fall or growth expectations rise).
• Macro and policy: monetary policy (interest rates), inflation dynamics and fiscal policy materially affect discounting and risk appetite.
• Market structure and flows: large-scale ETF inflows, passive indexing, buybacks and derivatives can mechanically push prices higher.
• Behavior and sentiment: investor risk appetite, momentum chasing and reduced fear (low volatility) lengthen rallies.

Understanding how these pieces interact helps answer whether a current rally can persist and what would end it.

Historical context of sustained stock rallies

Notable long bull markets teach common lessons about duration and drivers:

• 1990s technology cycle: Earnings growth and a narrative about the internet and software drove prolonged multiple expansion. Eventually valuation excess and profit disappointments ushered in a correction.
• Post-2009 recovery: Aided by prolonged low interest rates and aggressive central-bank accommodation, equities rose for years as corporate profits recovered after the global financial crisis.
• 2022–2025 rally: A mixture of post‑pandemic reopening, improving earnings, strong buyback activity and concentrated leadership in AI and large-cap tech propelled major indices higher. As of Jan 21, 2026, media coverage and analyst commentary highlighted AI-driven capex and earnings as central — while noting valuation concentration risks.

Historical patterns show rallies can last years if earnings growth and liquidity remain supportive; however, market concentration and valuation extremes increase vulnerability to corrections.

Fundamental drivers that can sustain stock gains

Earnings growth and corporate profitability

Sustained stock gains most often rest on rising corporate earnings. When companies report higher revenues and expanding margins, forecasts for future cash flows increase — justifying higher share prices.

• EPS growth matters for indices: If aggregate S&P 500 EPS grows at a healthy pace, index levels can rise even without multiple expansion.
• Revenue mix and geographic exposure affect growth: Companies with secular tailwinds (cloud, AI infrastructure, industrial upgrades) can sustain higher growth and support continued stock advances.

As of late 2025–early 2026, analysts pointed to AI investments by large tech firms as a major driver of revenue upside for semiconductor and cloud infrastructure companies — a structural support for earnings (source: industry earnings season commentary, Jan 2026 reporting).

Valuation expansion (multiples)

Even without rapid earnings growth, stocks can keep rising if valuation multiples expand. Multiples expand when:

• Discount rates decline (lower real yields or risk‑free rates).
• Investor risk appetite increases, leading to higher willingness to pay for growth.
• Structural narratives (e.g., AI revolution) cause re‑rating of sectors.

Sustained rallies often reflect a mixture: modest earnings growth plus some multiple expansion. However, valuation expansion without earnings support is fragile.

Dividends and share repurchases

Dividends and buybacks return cash and reduce share counts, lifting per‑share metrics like EPS. Large buyback programs — common among sizable U.S. corporates — have materially supported EPS growth over the past decade and can mechanically support stock prices by increasing buy-side demand.

• Buybacks accelerated after profits recovered post‑pandemic; this is a mechanical demand source for equities.
• Dividend yield attractiveness versus bond yields also matters: when real yields are low, dividend yields become comparatively attractive.

Corporate capital allocation and productivity (tech/AI investment)

Capital allocation choices — capex, R&D, acquisitions — determine future profitability. Investments that raise productivity (for example, AI infrastructure that cuts costs or creates new revenue streams) can support higher expected cash flows, sustaining higher stock prices over time.

As of early 2026, many large technology firms publicly disclosed elevated capex budgets to expand AI data centers and cloud capacity — a structural investment cycle that supports semiconductor and cloud suppliers (reporting noted during 2026 earnings season).

Macroeconomic and policy drivers

Monetary policy and interest rates

Monetary policy is one of the strongest levers for equity valuations. Lower policy rates and accommodative central‑bank stances tend to:

• Reduce discount rates applied to future corporate earnings, raising present value.
• Encourage investors to seek yield in risk assets, increasing flows into equities.

Conversely, tightening and higher real interest rates increase discounting and tend to pressure valuation multiples.

Inflation and real returns

Inflation affects stocks through two channels:

• Nominal earnings may rise with inflation, but real profit margins can be compressed if input costs outpace prices.
• Higher inflation usually leads to higher nominal yields, which raise discount rates and reduce equity attractiveness relative to inflation‑protected bonds.

Low and stable inflation is generally supportive of sustained equity gains.

Fiscal policy and government support

Fiscal stimulus, tax changes, or targeted spending can boost GDP and company revenues. For example, increased infrastructure spending or incentives for technology adoption can raise demand for certain sectors and their earnings outlooks.

Global macro conditions

Global growth differentials, currency moves and cross‑border capital flows influence multinational company revenues and the attractiveness of U.S. equities to foreign investors. Liquidity provided by major central banks (including PBOC easing actions) can create supportive conditions across asset classes.

• As of Jan 17, 2026, reports noted the People’s Bank of China injected significant liquidity (reverse repos totaling large sums) — an example of central-bank liquidity influencing global risk appetite.

Market-structure and flow-driven factors

Liquidity, asset flows and passive investing

Large, sustained inflows into equities — especially via passive funds and ETFs — can mechanically push prices higher. Key points:

• Passive indexing directs cash to basket constituents, which raises demand for shares in proportion to their index weight.
• ETF popularity and large mutual fund contributions create steady buy-side pressure.
• Institutional flows (pension funds, sovereign wealth funds) can provide long‑term demand.

Morgan Stanley and Fidelity commentary in recent years emphasized how persistent flows into indexed strategies and ETFs can lengthen rallies by providing predictable demand.

Market breadth and concentration

Rallies led by a concentrated group of mega‑cap stocks (e.g., large AI beneficiaries) can lift headline indices even if broader participation is weak.

• Concentration can sustain headline gains, but narrow leadership increases systemic risk: if the leaders falter, broad indices can fall quickly.
• Tracking breadth metrics (number of advancing stocks, equal‑weight vs market‑cap weighted indices) helps assess whether a rally is broad or top‑heavy.

Technicals, momentum and seasonality

Momentum algorithms, trend‑following funds and retail traders all contribute to price trends. Momentum can be self‑reinforcing: rising prices attract new buyers, which pushes prices further.

• Seasonality and calendar effects (quarterly rebalancing, end‑of‑year flows) can create recurring demand patterns.
• Low volatility regimes make leveraged strategies cheaper and increase risk‑taking.

Market microstructure effects

Leverage, options positioning, margin lending and liquidity provision can amplify price moves. For example:

• Heavy call‑option buying can lead dealers to hedge by buying the underlying stock, a feedback loop that can push prices higher.
• Margin expansion allows buyers to amplify exposures, fueling further demand until stress or margin calls reverse the dynamic.

Behavioral and sentiment drivers

Investor confidence and risk appetite

Investor sentiment is a powerful driver. When confidence is high, risk premia compress and investors accept higher multiples. Retail participation spikes, and institutions increase allocations to equities.

Complacency signals

Low VIX, elevated put/call call ratios skew, or record low credit spreads can indicate complacency. These conditions can sustain rallies in the near term but also signal crowding and vulnerability to shocks.

• Monitoring extremes in sentiment metrics helps identify when a rally is becoming crowded.

Corporate and mechanical catalysts

Share buybacks, M&A and index inclusion

• Buybacks reduce float and support EPS. When buybacks are large relative to daily trading volumes, they can provide strong technical support for share prices.
• M&A activity can lift valuations in target sectors and create re‑rating opportunities.
• Inclusion or reweighting in major indices can create sudden demand due to index fund flows.

Earnings guidance and analyst revisions

Upward analyst revisions and stronger‑than‑expected guidance sustain rallies by resetting forward expectations. Conversely, downward revisions quickly remove valuation support.

Structural and thematic drivers

Technology revolutions (AI, cloud, semiconductors)

Transformative technologies can justify multi‑year reratings by raising expected future profits across many firms. The AI cycle in 2024–2026 is an example: heavy capex by hyperscalers and faster revenue growth among AI suppliers provided a durable growth narrative for certain sectors.

However, narrative strength alone is insufficient without eventual profit delivery.

Sector rotation and leadership cycles

Rallies often rotate across sectors as growth expectations, rates and economic cycles shift. A broad, sustainable advance ideally shows leadership rotation rather than dependence on a single sector.

Limits, headwinds and why bull runs end

Sustained rallies can end for multiple reasons:

Valuation extremes and mean reversion

Elevated valuations make markets sensitive to any disappointment. When multiples are high, smaller earnings misses can cause outsized price declines.

Earnings disappointments or margin compression

If aggregate corporate earnings fall short of expectations — due to weaker demand, rising input costs, or margin pressures — the valuation foundation erodes.

Tightening monetary policy and higher real rates

A switch to tightening and a rise in real yields reduce present values of future earnings and can reverse valuations.

Credit stress, liquidity shocks, geopolitics and macro shocks

Nonlinear events (banking stress, sudden liquidity withdrawal, geopolitical events that affect trade or supply chains) can abruptly reverse investor risk appetite and end rallies.

Indicators to monitor for whether stocks can keep rising

Practical metrics to watch (actionable and measurable):

• Aggregate earnings metrics: S&P 500 trailing and forward EPS, year‑over‑year EPS growth.
• Forward P/E and cyclically adjusted P/E (CAPE).
• Breadth indicators: percentage of stocks above their 50‑day moving average, advance/decline lines, equal‑weight vs cap‑weight index performance.
• ETF and mutual fund flows: net inflows to equity ETFs (weekly/monthly data).
• Buybacks pace: quarter‑by‑quarter repurchase announcements and execution vs prior periods.
• Volatility and options skew: VIX level and term structure, put/call ratios.
• Real yields: 10‑year Treasury yield minus inflation expectations.
• Credit spreads: high‑yield vs Treasuries (reflects risk appetite and liquidity).
• Margin debt and leverage metrics: broker margin balances and systemic leverage indications.
• Macro surprises and PMI data: to detect weakening economic momentum.

Each indicator is imperfect alone; combined signals provide better context.

Investor implications and common strategies

Different investors respond differently to the question of "how can stocks keep going up":

• Long-term buy‑and‑hold investors: Focus on fundamentals and diversification. Keep allocations aligned to goals and rebalance rather than chase momentum. Use dollar‑cost averaging to mitigate timing risk.
• Active managers: Monitor breadth, valuation dispersion, and sector rotation to identify new leaders and avoid crowded trades. Watch sell‑side revisions and incoming macro data closely.
• Traders and momentum investors: Use technicals, stop rules and volatility management. Trend-following strategies can capture persistence but must manage drawdowns when momentum reverses.

Risk management suggestions (neutral):

• Diversify across sectors and market caps to reduce concentration risk.
• Monitor position sizing and margin use — high leverage increases downside risk when rallies end.
• Consider defensive hedges (not as advice, but as risk‑management tools) for event risk and tail scenarios.

Bitget tools and monitoring (brand integration)

• Track ETF flow data and large‑cap order books through Bitget market tools to monitor liquidity and concentration.
• Use Bitget Wallet to track holdings, manage rebalances and safely store long‑term allocations. Bitget’s portfolio tracking features can help monitor realized/unrealized exposure to sector leaders and correlate holdings with index breadth signals.

Recent case study: 2022–2025 rally and AI-driven gains

What propelled the 2022–2025 rally, and how does that history inform the question "how can stocks keep going up"?

• Earnings recovery and buybacks: After the post‑pandemic adjustments, many companies restored profitability. Buyback programs executed after 2022 materially supported EPS and provided mechanical demand for shares.
• Monetary expectations: Periods of anticipated easing or stable real yields supported multiple expansion at times.
• AI and concentration: Large-cap tech and AI beneficiaries (chipmakers, cloud providers) saw outsized revenue growth and investor enthusiasm. As of Jan 21, 2026, reporting around earnings season highlighted heavy AI capex by hyperscalers and the role of chipmakers and cloud infrastructure vendors in delivering the revenue upside that underpinned market gains.
• Flow dynamics: Strong ETF inflows and passive allocation trends added persistent demand to market‑cap weighted indices.

Taken together, these drivers show how a combination of improving fundamentals (earnings), persistent flows, and a strong thematic narrative can sustain a multi‑year rise. They also illustrate the risk: the rally became concentrated and valuation sensitive, so broadening participation would be needed for truly durable gains.

(As of Jan 21, 2026, press coverage and institutional commentaries emphasized both the earnings uplift from AI spending and the elevated concentration in mega‑cap leaders.)

How stock rallies differ from crypto rallies (brief comparison)

• Fundamental anchors: Equity rallies are more tightly linked to corporate earnings, dividends and buybacks. Crypto rallies often revolve around tokenomics, narrative, liquidity and network effects.
• Valuation frameworks: Stocks are priced on expected cash flows and discount rates; many crypto assets lack stable cash flows, making valuations narrative-driven.
• Market hours and liquidity: Stocks trade on regulated exchanges with settlement cycles; crypto trades 24/7 with different liquidity and custody risks.
• Volatility and tail risk: Crypto tends to show higher intraday volatility and event risk; equities usually display lower realized volatility at index level but can still experience abrupt corrections.

For those monitoring both markets, the drivers that answer "how can stocks keep going up" (earnings, rates, flows) differ in emphasis and measurement from what sustains crypto moves (on‑chain activity, token supply dynamics, narrative momentum).

Limits to continued gains: scenarios that would make stocks stop rising

Examples of conditions that could halt a rally:

• Earnings growth disappoints materially relative to elevated expectations.
• Central banks raise real rates to combat inflation or because labor markets overheat.
• Credit stress appears (widening credit spreads or bank funding issues), removing liquidity from risk assets.
• A rapid unwind of leveraged derivative positions or mass margin calls amplifies selling.

Monitoring the indicators above helps detect when these headwinds are materializing.

Practical checklist: monitor these within Bitget and public data

1. Aggregate earnings growth: track S&P 500 forward EPS and quarterly revisions.
2. Forward P/E and CAPE ratio: watch for multiple expansion or contraction.
3. Breadth measures: advancing issues, equal‑weight vs cap‑weight divergences.
4. ETF inflows/outflows: net weekly flows into equity ETFs.
5. Buyback announcements: quarter‑by‑quarter repurchase cadence.
6. Volatility & options market: VIX, put/call ratios, dealer gamma exposure.
7. Real yields and inflation expectations: 10‑year real yield trends.
8. Credit spreads: high‑yield vs Treasuries.
9. Margin balances and systemic leverage indicators.
10. Macro surprises: PMI, payrolls, consumer sentiment surprises versus expectations.

Use Bitget market dashboards and Bitget Wallet portfolio views to track exposure and set alerts for key thresholds (for example, if breadth narrows below a preset level or if ETF outflows turn negative).

Practical examples: reading signals

• If earnings growth is positive, ETF inflows remain steady and breadth improves (more stocks participating), that combination supports the argument for continued gains.
• If headline index levels rise while equal‑weight indices lag and the top 10 stocks drive most returns, risk is concentrated — monitor for any leader weakness.
• If VIX falls to multi‑year lows while margin debt and leveraged call activity increase, that signals crowding and higher tail risk.

Governance of reporting and timeliness

• As of Jan 21, 2026, major earnings season reports emphasized AI capex from hyperscalers as a key earnings driver for semiconductors and cloud providers (press coverage during early 2026 earnings season).
• As of Jan 17, 2026, reports noted that the People’s Bank of China injected substantial liquidity via reverse repos, which markets interpreted as a risk‑on supportive move for regional risk assets.

All dates above reference public media and institutional commentary available at the reporting time.

Final tips for readers

• Answering "how can stocks keep going up" requires watching both fundamentals and flow/structure signals. Earnings and real economic growth are the long‑term anchors; liquidity, passive flows and sentiment often determine the rally’s length and amplitude.
• Regularly check a small set of indicators (earnings revisions, breadth, ETF flows, real yields, VIX) rather than react to every headline.
• Use secure tools to monitor and manage holdings: Bitget provides market dashboards for flow and liquidity signals, while Bitget Wallet is suitable for portfolio tracking and secure custody of digital holdings.

Further exploration: if you want a concise monitoring checklist, market dashboard setup tips for Bitget, or a data feed list to automate these indicators, I can expand this article with step‑by‑step instructions.

References and further reading

• "We're Still Bullish on Stocks" — Kiplinger (2025). (Source used for long‑term optimism context.)
• "Should Investors Chase the Market’s Momentum?" — Morgan Stanley (2024). (Source used for flow and momentum discussion.)
• "Why The Bull Market Should Keep Going" — Forbes (2025). (Source used for narrative and valuation context.)
• "Q4 25 Equity Market Perspectives" — Fidelity Institutional (2025). (Source used for institutional flow and buyback analysis.)
• "Why the bullish market may have years to run" — Fidelity learning (2025). (Source used for secular bull arguments.)
• "2026 outlook for stocks" — Fidelity (2025). (Source used for 2026 earnings and capex outlook.)
• "Markets have soared–what's next?" — Fidelity Viewpoints (2026). (Source used for breadth and macro considerations.)
• "The S&P 500 is in a bull market. Here's what that means..." — AP News (2023). (Background on bull market definitions.)
• "Factors That Move Stock Prices Up and Down" — Investopedia. (General framework for price drivers.)
• "What Makes Stocks Go Up and Down?" — The Motley Fool (2025). (Investor‑facing explainer.)
• Press reporting and earnings coverage (Jan 2026): coverage of large tech capex and AI spending, and market commentary regarding liquidity injections from major central banks (citations noted in text with dates where relevant).

Notes and disclaimers

• This article is educational and factual in tone. It does not provide individualized investment advice or recommendations. Readers should consult a licensed professional for personalized advice.
• Data and reporting dates referenced are accurate to the time of publication and based on the sources listed above (dates cited inline where applicable).