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 21^st, 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.

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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.”

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