Investors are watching the S & P 500 after it rallied back toward the key 4,600 level to see if it can break out to new all-time highs. But some market observers worry the index could be getting ahead of itself. A record high in the S & P 500 looks promising after the broader index on Friday closed at 4,594.63, or its best level since March 2022. The benchmark index is also a stone’s throw from the all-time intraday high at 4,818.62 and its all-time closing high of 4,796.56, having hit both milestones in January 2022. Wall Street is hoping that bullish momentum can continue, pointing to seasonal strength as December is typically a positive month for markets. What’s more, the rally toward 4,600 is especially notable given the greater market breadth. In July, the last time the S & P 500 tested the threshold, the rally was led by mega-cap tech stocks. This time, however, the participation is broader as this year’s laggards such as real estate and utilities perk up. .SPX YTD mountain S & P 500 But some market observers worry the market is starting to look overbought, and they fear the pivot to defensive sectors may be a sign the market could start to turn lower. On Monday, the market rally took a breather; the S & P 500 ended the session lower by 0.5%, and it stood about 5% below its record. Stocks opened lower again on Tuesday. “As the market sits overbought and back at resistance from this Summer’s highs, we feel it begs the question. Are you really buying in at these levels?” wrote Wolfe Research’s Rob Ginsberg in a Saturday note. “The improvement in the performance of the average stock … is promising to see, but at this point, it feels and looks to us like an opportune time to cash in some chips in the SPY and Q’s,” Ginsberg said. On Sunday, BTIG’s Jonathan Krinsky put it more plainly, saying there are some “warning signs” even as market breadth improves. “As long as the music is playing, you’ve got to get up and dance, but when the music stops, we want to be cognizant to not overstay our welcome,” he wrote. In fact, one market technician on Monday said the S & P 500 could plunge back to its bear market lows in 2024. JPMorgan’s head of technical strategy Jason Hunter expects the broader index could fall to 3,500 , a drop of more than 20% from where it is currently. “Stocks should pull back, [and] in my base case on the technical side, the S & P 500 is gonna drop to 3,500,” Hunter told CNBC’s ” Squawk Box ” on Monday. His bearish thesis is underpinned by a hard landing scenario he said could come to fruition next year. To be sure, some technicians were more bullish on the prospect of a breakout above 4,600. LPL’s chief technical strategist Adam Turnquist said he’s anticipating the S & P 500 will top the resistance level, though he specified, “it may take a few attempts based on the degree of overbought conditions.” Meanwhile, Oppenheimer’s Ari Wald expects that stocks can continue to “surprise higher” over the coming years, and said that growth stocks are the “more attractive” stocks. “Our analysis indicates weakness in non-growth has been a more significant outlier than strength in growth, and in turn, convergence is more likely to be catalyzed by catch-up than catch-down,” Wald wrote on Saturday. Still, JC O’Hara, chief market technician at Roth MKM, said equities are starting to look overbought, and urged investors to shift their positioning into quality stocks. Some of his bullish quality picks include Broadcom , which is already up 65% this year, and Lululemon Athletica , which is up 42%. “Those focusing on the ‘why’ should be concerned that the market’s narrative changed quickly from what could go wrong to what could go right. Plenty of our indicators moved swiftly from oversold to overbought conditions in a short period of time,” said O’Hara. “This is not the time of year to bet against the market, but if we are betting on the market, we recommend doing so in a higher quality way,” he continued. — CNBC’s Michael Bloom and Chris Hayes contributed reporting.