[S]omething is lurking out there that trumped what should have been a decent rally attempt on Scott Brown’s victory. I mean Senator-elect Brown even won 61% of the Kennedy stronghold Hyannis Port for gosh sakes! So the fact that we didn’t even get the hint of a rally from the ‘Massachusetts Massive’ is worrisome. Now I am certainly not predicting it, but I remember July 1998 when the DJIA peaked around 9338 and began to slide. That Dow slide turned into a mini-crash and NOBODY knew why. And then b-a-n-g, out of the blue came Long Term Capital Management that almost ended financial life as we knew it. Accordingly, we remain cautious.

Leahy added, “The right strategies, the right management teams, and the right balance sheets will get funded.”

We need to be on our toes to be prepared to trim back positions if needed and to cut losses quickly if needed. This update is not to alarm anyone, as there is likely one more leg up in this up cycle to higher highs yet. However, let's be on guard.

"Simply put, there has been a dramatic shift of balance sheet risk from the corporate to the government balance sheet," the RIC stated. "It is no surprise then that our strategists forecast equity returns to surpass bond returns in the next 12 months."