Bull market behavior - At the risk of stating the obvious, the surge in equities has been nothing short of impressive. The number of stocks participating on the upside continues to expand as more economy sensitive stocks either break out above their June-October trading ranges, or in the case of financials and energy, reverse 2-4 month downtrends. And, while cyclical stock accelerate, growth stocks continue to consolidate in orderly, sideways trading ranges toward longer-term support at their rising 200-day moving averages, working off the overbought condition that developed in the summer. From my technical perspective, the overall behavior reflects a market in the relatively early stages of a normal bull cycle with capital flowing into more pro growth groups from safety asset classes like treasury bonds and safety sectors, such as staples.

Too far too fast? - Of course, with cyclical stocks rallying so strongly over the past 3 months, a growing number of managers are questioning whether the rally has gone too far too fast. After all, the Russell 2000 Small-cap Index, a barometer for cyclical stocks, is up over 30% from late September and just over 20% from the end of October!

For short-term traders, yellow flags are beginning to show up and signal caution as put-call rati...

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