1. Strategists remain broadly constructive on equities for 2026

A current Bloomberg survey of 21 strategists shows no bearish forecasts for the S&P 500. They foresee roughly a 9 per cent average gain in 2026, constituting a rare fourth consecutive year of gains if realised. Previously cautious institutions, including JPMorgan, have moved fully to a bullish stance with a year-end 2026 target near 7 500 on the S&P 500. None of the surveyed strategists expect a material downward trend next year, though they do acknowledge various risks at the margin. 

2. Recent pullbacks tend to be shallow and typical of strong uptrends

Analysts note that pullbacks in 2025 have generally been modest, offering only shallow “buy the dip” opportunities rather than deep corrections. Historically, such shallow retracements have been part of constructive bullish runs, and buying those dips has often been rewarded during this cycle. 

3. Markets remain driven by powerful themes

AI-related earnings growth, resilient corporate profits and expectations of potential interest-rate cuts continue to underpin the optimistic outlook. These factors support a continuation of the bull market narrative into 2026, albeit with heightened dispersion across sectors. 

4. Pullback dynamics and short-term caution

The market pullback coinciding with the recent opening weakness has been partly driven by profit-taking in tech and other key leadership sectors. This reflects standard market behaviour after extended rallies and record highs, not necessarily a trend change in the broader market. 

5. Risks and valuation concerns still matter

Even with widespread bullish forecasts, some commentators highlight that unanimous optimism can itself be a risk signal. Elevated valuations, concentration in a few mega-cap tech names, macro uncertainties (such as geopolitical tensions and trade policy) and historical patterns suggest caution. Analyst scepticism about overreliance on bullish strategist forecasts is a reminder that forecasts are not guarantees. 

Practical implications for positioning

Buying the dip:

If your investment horizon is medium to long term, incremental accumulation on dips within an uptrend can lower average costs and capture potential upside consistent with strategist forecasts. Historically, within this cycle, dip-buying strategies have been effective due to rapid rebounds after pullbacks. 

Rebalancing:

If your specific exposure to equities is above your target allocation, or if valuations have stretched your risk tolerance, rebalancing before year-end can be prudent. Rebalancing reduces concentration risk and locks in gains without fully exiting the market.

Blend approach:

A balanced strategy is to take partial profits on significant strengths, maintain core exposure to strategic growth drivers, and selectively deploy cash on meaningful weakness or sector-specific opportunities.

Policy and macro context

Continuing economic resilience, AI-driven earnings growth, and a potentially more dovish Federal Reserve are broadly supportive. However, macro risks (inflation pivots, geopolitical tensions, trade policy) can cause near-term volatility, warranting disciplined risk management rather than aggressive leverage.

Conclusion

The recent pullback does not, at this stage, signal a broad market reversal. Rather, it may represent normal volatility within a long-term uptrend that many strategists expect to continue. Whether you buy the dip, rebalance, or use a combination depends on your risk tolerance, time horizon, and portfolio composition. A systematic framework that incorporates incremental buying on weakness and periodic profit-taking is likely the most prudent for the current market environment.