As US stocks approach a rare six-month winning streak, investors face a dilemma: whether to cash in profits or double down. Data shows the S&P 500 has remained above its 50-day moving average for 125 consecutive trading days—its longest stretch since 2011. Over the past three decades, the benchmark index has only recorded three longer rallies.

While extended rallies rarely end solely due to duration, the S&P 500’s 38% surge since early April has added $17 trillion in market value, pushing valuations into elevated territory and fueling crowded positions. Bulls point to historical trends, as November typically kicks off the market’s strongest six-month period. However, after one of the S&P 500’s most powerful six-month runs since the 1950s, the question is whether year-end gains have already been priced in.

Dan Wantrobski, technical strategist and associate director of research at Janney Montgomery Scott, warns, "We’re entering a danger zone for another pullback." He sees potential for the S&P 500 to drop up to 10% by December. "Any decline from here may not be severe, but without a timely correction, we risk a sharper selloff in early 2024 as traders rush to deflate bubbles."

The index’s 125-day streak above its moving average signals robust momentum to technical analysts like Wantrobski. In 2011, during a major debt ceiling standoff, the S&P 500 held above its 50-day average for 130 days. If the current rally extends through next Wednesday, it would rank as the second-longest streak this century, trailing only the 149-day run in February 2007. The record remains the 257-day streak from January 1995 to January 1996 during the dot-com bubble.

Critical days lie ahead with Big Tech earnings and the Federal Reserve’s rate decision. Investors will scrutinize Fed Chair Jerome Powell’s post-meeting remarks for policy clues, while earnings season hits full stride—over 40% of the S&P 500’s market cap reports this week, including Microsoft, Alphabet, Meta (Wednesday), Apple, and Amazon (Thursday).

Concerns mount over tech valuations as another key indicator—the 200-day moving average—appears stretched, trading 13% above its long-term support level of 6,097. Historically, such gaps precede selloffs, as seen in 2011, 2018, and 2021. In July 2024, the index briefly traded 15% above this average before a summer plunge triggered by unwinding yen carry trades.

Yet Rich Ross, Evercore ISI’s head of technical analysis, sees no immediate alarm. He notes the S&P 500 has frequently traded 10%+ above its 200-day average in recent years, often consolidating before new highs. Ross remains bullish on seasonal trends: November averages a 2.5% gain over 30 years—the market’s strongest month—versus 0.6% for other months.

"Sentiment and positioning remain cautiously pessimistic despite record highs, weighed by trade war and credit risk fears," Ross observes. His year-end S&P 500 target of 7,400 implies 7.4% upside from Tuesday’s close. "Sometimes you ride the trend, sometimes you fade it. Right now, you can’t fight this rally."