Stocks are due for a pullback.
For the last month I’ve been noting that stocks were due for a correction. The reason for this pertained to the lack of underlying demand driving this current bull run. Major lows that trigger 10%+ rallies in stocks usually feature at least one 90% Up Volume Day (when 90% or more of the total trading volume on a given day is attributed to stocks that closed higher) or at least several 80 UVOL days.
The move from the November lows has seen only ONE 80% UVOL on November 21st, 2025. And while stocks have eked out new all-time highs, you can see that price action has been a kind of “two steps forward, one step back” since late November.
. Indeed, sentiment is getting insanely frothy, which usually coincides with a short-term top.
The Investor’s Intelligence Sentiment survey shows 57% of investors are bullish right now. Only 16% are bearish. Similarly, the American Association of Individual Investors (AAII) survey which asks investors how they feel about stocks in the next six months just hit 49% the week before this one. That is the highest percentage of bulls since the bull market began in April 2025.
All of this suggests an interim top is forming or may have already formed. Again, I’m not saying that stocks are about to crash or enter a bear market… but it would not be surprising to see the S&P 500 drop down to the 6,600s-6,700s before THE low is in.
In this context, the #1 question for investors is whether the bull market is about to end and it’s time to “sell the farm” … or if what’s coming is another opportunity to “buy the dip.”