We came so close to reclaiming the all time highs ! Seems like enough stock market participants acted on the "overbought" narrative to cause the market to retreat. This is all part and parcel of a recovering market recording a very strong upward leg. The supply of willing buyers can start to exhaust ... for a little while at least. Bullish sentiment will still remain intact among traders for as long as the S&P 500 index trades above a rising 50-Day and 200-Day moving average.

The good news from a technical perspective is the percentage of stocks trading above their long-term and short-term moving average is broadening. It would be healthier to see a rising market become less reliant on the Magnificent 7 mega-cap stocks, but since they represent around 30% of the S&P 500 index, their influence on the index isn't going to wane any time soon. Broadening the number of up-trending stocks is always going to be welcome news.

I wonder if the strength of this uptrend has been heavily influenced by active fund managers window dressing their funds. Given the S&P 500 index is up more than 20% this year, no active fund manager wants to be caught out reporting a high cash position in their equity fund. This thing about a strong rising market is it's "reflexive". A rising market attracts more money into the market driving prices even higher. Let's see if this Santa rally still has legs.