"I hope you are well and congratulations on the recent organizational changes.

"I would like to ask a follow up question on some matters you raised in Monday's audio. In it, you said that the US market was due for a correction because of overextensions, dollar firmness, precious metal strength, etc.

"It seems you are suggesting that this type of correction will be a small one and the market will resume it's climb thereafter. However, later in the audio you mention that the strong performance of the materials sector is typical for the mature stages of a bull market.

"Could you please clarify your view on where we are? Is the correction you have in mind part of an ongoing cyclical bull market , or is that correction marking the end of that mature bull market as your latter comment suggests?

"Putting theory into practice, based on your view above, should we as investors be scaling back equity positions and building up cash reserves (alternatively, adding shorts to create a market neutral portfolio)?

David Fuller's view I am very well, thank you, and the organisational changes, which subscribers have yet to see, are the most exciting development in the long and once again evolving life of this service. Our commonsense goal is for subscribers to be the main beneficiaries once we have successfully resolved computer language issues and placed all our back history on a new, up-to-date and considerably more robust website.

Thanks also for your questions on where we are in this cyclical bull market for equities, which I am sure will be of general interest.

I read the other day that Wall Street's current cyclical bull market has now passed the average duration of these trends in terms of time. However, I would not worry too much about that today because it started from an unusually oversold level in 2009. Moreover, many other stock markets have seen considerably smaller recoveries although that is now helping some of them to outperform the USA in the latter stages of this cycle.

Today, the US and a number of other stock markets are overbought in the short-term. You can see this in the Stochastics which I posted yesterday and more importantly with your own eye when looking at 5-year weekly charts of the S&P 500 and the Nasdaq 100, not least because these trends have now been consistent for longer than at any time since the first stage of this recovery commencing in March 2009. This is revealing because a bull market declares itself with early strength and following the 'wall of worry' stage, sucks more people in with a concluding upside blow-off. This year's earlier consistency was interrupted by that big key day reversal on May 22nd (SPX & NDX), because the crowd thought QE tapering might be imminent. These uptrends have been more choppy subsequently, more so for SPX than NDX, against a background of rising valuations. However the most important consistency is in the progression of higher highs and especially the higher reaction lows.

These have remained unbroken because a self-feeding momentum move is underway. Moreover, the crowd's focus, as you may have noticed, is mainly on economic news and the preference is for data that is slightly below expectations. That may sound counterintuitive and in other cycles it could represent a headwind for share prices. However, in this cycle it is a mild tailwind because people believe that it delays the onset of QE tapering for a little longer. Today, for instance, the employment figures were below consensus causing some spokesmen to proclaim that the start of QE tapering had been pushed forward to March 2014. At US$85bn a month, QE remains a very big tailwind for for Wall Street and many other stock markets.

The next reaction on Wall Street is likely to be a small corrective phase within the overall upward trend, similar to the last two pullbacks, provided it starts from a level that is not excessively above where we are today. That would not alarm the crowd which has been emboldened by the likely additional delay in QE tapering. However, if the market sees only a minimal consolidation before surging significantly higher, that move would look climactic.

It is an understandable tactical mistake to sell too soon in a maturing bull market because that is when some of the best gains occur. People who do sell too soon in a bull trend usually do so because valuations are high. Nevertheless, if there is no dimunition in the monetary stimulus, and no exogeneous shock to the system, the market can easily move even higher.

The easiest danger signal ending to identify would be a climactic upward acceleration, in which case the deployment of trailing stops while also gradually lightening positions on strength would be appropriate. However, I would resist the temptation to short until a clearly bearish dynamic occurs.

Alternatively, if US share indices do not accelerate higher but instead, fall back and break their sequences of higher reaction lows, you will know that the uptrend has lost both its momentum and defining medium-term consistency characteristic. This would unsettle investors by indicating that supply was beginning to outweigh demand.