The S&P 500, Nasdaq, and the Dow all closed at new all-time highs this week.

And while the headline indices looked calm, the path to get there was anything but. We saw some real volatility mid-week, especially in momentum and growth names, before the market recovered.

A big driver was the latest inflation report. CPI came in at 3.0% year over year in September, slightly below expectations. It’s still higher than the Fed would like, but the direction matters more than the level here. The trend is still moving lower, and markets are treating that as confirmation that the Fed can continue to cut rates.

The NASDAQ is now on track to finish its 7th straight positive month. This doesn’t happen often. Historically, when the NASDAQ has rallied for seven months in a row, short-term returns have been mixed, but looking out a few months and especially a year later, it has been higher every time.

But while the major indices barely moved, we just saw a sharp pullback under the surface. The Goldman Sachs Momentum Index dropped about 15% in six days, and a lot of individual names fell 30–40% during that stretch. The selling was fast and concentrated. But the chances are high that this might be the end of the pullback. This type of sharp reset usually clears the excessive leverage, which increases the likelihood that the pullback is nearing its end.

Here’s another way to look at it: Investors rotated out of the high-flyers and into more defensive names. That’s actually a healthy sign. Strong bull markets tend to move in waves, not all at once.

Speculation is still very present. Zero-day-to-expiration options trading remains extremely heavy. These are essentially ultra-short-term leveraged bets. They add fuel on the upside but also increase fragility if news turns suddenly.

Margin debt is also rising. Rising leverage doesn’t kill an uptrend on its own, but it does…