Don't Listen to the Bears – This Market Is Healthy

Michael Burry was almost a nobody...

He made an aggressive bet against the booming housing market in the mid-2000s. The only problem was, he was too early. And he almost went bust before his gutsy call paid off.

Burry managed to stay solvent long enough to profit from his bet. His success landed him in Michael Lewis' bestseller The Big Short... And thanks to his notoriety, Burry can now make the financial headlines with just one tweet.

Burry became a market legend by doing what everyone is trying to do today...

Calling the top.

Let's face it... If your bullish call on the market is proved right, it won't seem like anything special. Markets usually go up. But if your bearish prediction is proved right, that's different. You look like a genius.

Said another way, bullishness sounds like cheerleading. Bearishness sounds like analysis.

Last year, investors had plenty of reasons to believe the bull market would end soon. But stocks took those worries in stride and kept moving higher. As they did, the chorus of "top callers" only grew.

Now, just about everywhere you look, folks are calling the top as 2026 begins. But that's the wrong stance today...

The market is healthy, based on the measure that matters most. We shouldn't assume we're anywhere near a top until that changes. In fact, we've entered 2026 with a darn bullish setup on our hands.

Three Reasons the Stock Market Is Healthy

Ever since this bull market began in late 2022, we've heard the same concern over and over...

"It's just seven stocks driving the gains."

This refers to the "Magnificent Seven" – the seven largest U.S. stocks. These market leaders get a lot of attention. And they have driven much of the artificial-intelligence boom.

It would be worrisome if the bull market owed everything to the Magnificent Seven. A market with only a few big stocks driving the rally is a house of cards.

The good news is, folks were wrong about this one. And it certainly isn't true today.

We can see it by studying market breadth. This tells us whether lots of stocks are rising, or just a few. In a weak bull market, only a few stocks are participating in the rally.

That's why we want to see all kinds of stocks soaring together. It's one of the surest signs that a bull market has legs.

To see market breadth, let's look at the advance/decline line for all New York Stock Exchange ("NYSE") listings. To get this line, you take the number of rising stocks from that day and subtract the number of falling stocks. Then you add that number to the previous day's reading.

This creates a cumulative measure that rises when more stocks are rising and falls when more stocks are falling.

Importantly, if only seven stocks were driving the market, the advance/decline line would fall even as stocks hit highs. That divergence would be a bad sign. And it's what the "top callers" would have you think is happening today.

But they'd be wrong. Take a look...

As you can see, stocks rose throughout 2025. And the advance/decline line for the whole NYSE is still hitting all-time highs right alongside the overall market. No divergence is in sight.

The bears will still cherry-pick the data to spook anyone who will listen. They'll say that the Magnificent Seven are overrepresented in the market – a measure called concentration. While market concentration has increased, that always happens in bull markets. It's a feature, not a bug.

Plus, we can see that concentration isn't a problem by looking at the S&P 500 Equal Weight Index. Instead of weighting stocks based on their market cap, this index holds an equal amount of each stock, regardless of size.

This index shouldn't perform well if only seven stocks are driving the market. But again, that isn't happening today. And this index is hitting highs as well...

The takeaway here is clear once again... Most stocks in the market are rising.

Let's look at one last chart to see the health of the current market.

This final chart shows the percentage of NYSE-listed stocks that are trading above their 200-day moving averages (200-DMAs)... That is, it shows what percentage of the market is in an uptrend.

We don't want to see the market hitting highs while most stocks are in a downtrend. That kind of divergence would signal a looming crash.

Right now, about 60% of stocks are in an uptrend. That's a healthy number. It's not low enough to signal a divergence. And it's not high enough to signal an overheated market.

Take a look...

Our conclusion is clear... 2026 is beginning with a healthy market environment.

We're worried about a future where most stocks are falling, but the major indexes are rising. When that happens, it'll be a blazing red flag. But no matter how much the "top callers" want to be right, it's not here yet.

As we begin 2026, it's important to understand today's situation. We just finished out another fantastic year for investors. And the market is as healthy as ever.

That can change, of course. But we don't need to worry until it does. And for now, we can expect this healthy market to keep moving higher.

Good investing,

Brett Eversole