Last week, the major indexes fell back below round-number thresholds that had taken a lot of effort to eclipse. There has been an ongoing ebb-and-flow of capital between risk-on and risk-off, including high sector correlations, which is far from ideal. But at the end of it all, the S&P 500 found itself right back on top of long-standing support and poised for a bounce, and Monday’s action proved yet again that bulls are determined to defend their long-standing uptrend line.

As everyone knows, stocks do not go up in a straight line, not even during the holidays. So although the future looks bright for U.S. equities as the major indexes continue to hit or challenge new highs, the market has been gasping for a breather to gather bullish conviction. My fear has been that we might not see it until January, which likely would have resulted in a more severe correction at that time. But falling oil prices and a weak Energy sector seems to have introduced a reason to sell this week.

Rather than a Great Rotation from bonds into equities, the rotation instead has been from growth into value. Among the ten U.S. business sectors, uber-defensive sector Utilities is still the clear leader year-to-date, up more than +10%, followed by Energy and Healthcare. Healthcare and Materials were the leaders last week. Consumer Services/Discretionary remains the clear laggard YTD. Moreover, rather than bond prices falling, the 10-year Treasury yield has fallen even further to 2.52%, further indicating a flight to safety.

The technical picture for stocks has shifted from bearish into neutral, and our fundamentals-based sector rankings appear to have moved from bullish to neutral, as well. Thus, caution remains the order of the day until either the bulls or bears can find a catalyst -- and enough recruits -- to move the ball in their direction.

Stock market bulls made a valiant effort to fight off another looming correction last week. The economy is showing strong signs of recovery, the Fed remains confident enough to continue its stimulus tapering, and attractive alternative investments to the U.S. stock market seem scarce. Yes, bulls are all dressed up for more fun times. However, the technical picture paints a different story, at least for the near term.

Overall, the economy appears to be on a steady path to recovery. As the Federal Reserve eventually allows interest rates to rise, we likely will see a rotation out of value and into growth as defensive debt-intensive companies struggle relative to companies that have lower debt burden and stronger prospective earnings growth.

Although the large caps set new highs early on Friday, small caps and NASDAQ have not come close to their prior highs. Friday closed with extreme weakness across the board, and it was on high volume. The technical picture and our fundamentals-based sector rankings have both taken a bearish turn, so we might see more weakness ahead.

As Q1 of 2014 comes to an end, we can see that January was extremely weak, February gained it all back, and March treaded water. At this point, as we head into what has been the strongest month of the year over the past 20 years, signals are mixed, with a steadily recovering economy and bullish fundamental indicators mixed with neutral technical and some bearish sentiment indicators.

Bulls continue to climb their wall of worry, as uncertainty from the latest “bricks in the wall” created by Russia in Crimea, slowing growth in China, and Fed tapering fades into the mosaic.

Well, Fed Chairman Bernanke has proved me wrong by dipping his toe into the dreaded tapering of QE3. In retrospect, I suppose he preferred to take this first step on his own rather than put the onus (and any associated fallout) on the back on his successor.