After the opening of the US stock market on Thursday, bulls flocked into the market, buying up stocks that were suddenly sold off less than 24 hours after a historic plunge triggered by the Federal Reserve's hawkish stance.

But as Thursday's trading progressed, the index retraced its initial gains and even completely reversed them, raising the question of whether this is just a dip—and whether investors should Buy.

After nearly two years of an almost unparalleled bull market in history, the stock market is in a precarious situation. Signs of prosperity abound: tight positions and a lack of demand for loss protection. Fund managers have reduced cash holdings to historic lows and heavily invested in USA Stocks. The S&P 500 Index is 10% above its 200-day moving average.

Eric Beiley, the managing director of Steward Partners Wealth Management, stated, 'I will be cautious,' adding, 'Volatility is high, and another Sell-off may occur.'

All of this is seen as a sign that the economy may be slowing down. Federal Reserve Chairman Powell discussed the current situation he observes and how the pace of interest rate cuts may be slower than expected, which could be the most unsettling aspect for stock market investors. 'It's like driving on a foggy night,' Powell described the interest rate outlook during a press conference on Wednesday, urging caution in lifting restrictive policies.

Adam Phillips, Managing Director of Portfolio Strategy at EP Wealth Advisors, stated: "Be careful what you wish for. Most people were expecting and supporting aggressive rate cuts, and that’s exactly what we got."

Traders are now facing a unique challenge of betting on the stock market's direction. History is no longer a guide. The previous macro environment—strong economy and expectations of the Federal Reserve easing monetary policy—has been upended. Coupled with Trump's tariff plan and the mass deportation of undocumented workers, along with the effects of tax cuts and regulatory reforms, the economic outlook has become even more chaotic.

Phillips stated: "After focusing on the positives following the results of the November elections, investors have come to accept the reality that policy uncertainty could bring bumps to the economy in the short term."

This volatility has caused the Cboe Global Markets Volatility Index (VIX) to rise to its highest level since August, when the stock market is typically in an optimistic period. Generally, in the second half of December, retail investors go on holiday, and fund managers take the opportunity to scoop up bargains, benefiting the stock market.

This year’s trend is different. As of now, the S&P 500 Index is down 2.4% in December, on track to record its worst quarterly performance in over a year. The S&P 500 Index has seen returns exceed 20% for two consecutive years, while the bulls are in such a strong position that their dilemma is whether to cash in on those gains before the new government’s plans and their impact on monetary policy become clearer.

Beiley from Steward Partners stated: "I have been building short-term cash positions with money market funds and U.S. Treasury bonds to hedge against the possibility that the Federal Reserve won’t cut rates as aggressively as previously expected—this is a wise move."

However, Global Fund Managers are going against the trend by reducing their Cash / Money Market holdings and investing substantial amounts into the USA stock market. In the process, they triggered a key Indicator, reaching a threshold that Bank of America indicated has historically been a signal to Sell Stocks.

For investors wanting to know what will happen next, this warning might be worth a second look.

Carol Schleif, Chief Market Strategist at BMO Private Wealth, stated, "As we approach the end of the year, many have realized profits. Taking some profits off the table might not be a bad idea."