November's strong rally may have stolen some of the thunder from a year-end rally.
Promising vaccine news spurred a major rotation in November into cyclical stocks, like industrials and financials - the stocks that will do well in an economic recovery.
The S&P 500 is up more than 11% for the month so far.
"If it's up more than 10%, it will only be the third time since World War II that November has been up that much," said Sam Stovall, chief investment strategist at CFRA. "Such a strong November has a tendency to steal from Santa."
But he said he still expects the market to be higher than its current level at year end even if there is a small so-called Santa Claus rally, and there should be a gain for December. On average, the S&P 500 has been up 1.5% in December, going back to World War II.
After November's strong gain, with the Dow breaking 30,000 and the S&P hitting highs, there's been increasing speculation the market could fall into a pullback phase as it digests gains.
But Katie Stockton, Fairlead Strategies chief technical strategist, said it's more likely the market will instead gain momentum from the stocks that have been dragging.
"I'm calling for a rotation back into FANG. That of course can help the major indices remain firm or forge higher a little bit here," she said. "I think the FANG stocks may contribute to upside before a pullback. I don't think you should be waiting for a pullback because it could be coming from higher levels."
She said from a contrarian perspective, sentiment and greed readings are at highs and could be seen as a signal of a pullback coming.
"People are talking about it," she said, adding there's also a high number of stocks that are advancing over decliners. "I would acknowledge that as a risk. You tend to see these extremes registered ahead of a pullback with a lead of anywhere from two to six weeks."
Stockton said the FANG stocks — Facebook, Amazon, Netflix, and Google parent Alphabet — along with Apple and Microsoft all have signs of being oversold. Those stocks were mostly higher Wednesday with Amazon was up 2% and Apple gaining 0.8%.
Stovall said he took FANG down to market weight several week ago. "Our belief is they're going to keep pace with the market," he said. But so far in November, they haven't kept up.
The S&P 500 was lower Wednesday, but the Nasdaq, lifted by tech, was up 0.4%.
"The FANG stocks can help take the floor when the names that are relatively overbought pull back," Stockton said.
She pointed to Apple, and said its gains could help the overall market. "[Apple] has a ~6% footprint in the SPX and ~12% footprint in the NASDAQ-100 Index. If it were to break out from the triangle that has formed since September, it would likely foster additional upside for the major indices despite the greed that characterizes the market right now," she wrote in a note. Apple was trading at around $116 Monday, and Stockton notes resistance is at $120, while support was near $110 per share.
T3Live.com' Scott Redler, who follows short term technicals, said Apple is now acting better. "Apple was under pressure earlier in the week, and it found its footing at $112.50," he said.
Tech is up 33% since the beginning of the year, but only as 4.3% since the start of October. Since that time, financials are up 18% and industrials are up 15%.
Strategists expect tech, with its highly cyclical semiconductor names, to also move higher but perhaps not as quickly as hit had. The FANG names are also the so-called "stay-at-home" stocks and they could do better as the virus continues to spread and hurt economic activity.
Ari Wald, technical analyst at Oppenheimer, said 87% of the New York Stock Exchange stocks are above their 200 day-moving average, the highest count since October 2009. That was when the market had been recovering for a few months after its sharp fall during the financial crisis, and it was considered a sign of all clear, Wald said.
"Markets do better when there's more stocks participating, and the fact such a large degree of stocks are participating, that's a good thing," he said.