Since the bullish percent timing entry to “buy” on November 4, the S&P 500 is up 9% without as much as a 2% pullback.

And the indicator remains positive… in fact, the last few days have brought some renewed strength.

This rally has been broad… something that market bulls desperately needed to have happen.

Currently, every sector, less energy-related, is positive as the sector curve displays.

We can see on a ratio chart comparing the equal-weight S&P 500 (RSP) to the market cap-weighted S&P SPDR (SPY) that RSP has started to perform better since mid-November.

Ditto the small-caps as this ratio of IWM/SPY demonstrates.

The Russell 2000 is on fire – up 22% since the October 27th low!

However, with overhead resistance less than 5% away, traders should probably look to enter on pullbacks.

Technically, the pattern remains range bound so I can’t get too excited just yet.

Finally, the NYSE Advance – Declines is sporting a breakout confirming internal strength.

The driver of this has been, of course, the complete 360 the FRB has taken.

December 1: “It would be premature to speculate…when policy might ease.”

December 13: “Rate cuts are something that begins to come into view and is clearly a topic of discussion.”

This begs the question… what changed in those two weeks that would cause such a shift in policy?

The result has been an over 100bps decline in the U.S. Ten-Year rate since the October peak.

One has to wonder if this might not set up for a repeat of what happened in the 1970s.

Just when they thought they had inflation beat, they lowered rates, and then inflation came back even stronger.

I would be remiss not to mention that nothing has changed regarding the Treasury’s need to sell more bonds in the coming months.

If they had trouble selling them when rates were higher, what is going to be the appetite now?