The Fed's last major move to lower interest rates was made in December 1991. The economy and the Bull market rolled on. Cyclical stocks such as autos and producers of large capital equipment were in vogue.

But things began to change with the subtle rise in interest rates in September 1993. The investment climate turned cloudy when The Fed tightened monetary policy in February 1994.We are now in a classic final phase of this Bull market. Stocks of commodities such as steels, paper and basic chemicals are on the rise. They are the last groups to see the boom in earnings. But the deadly duo of rising inflation and interest rates are also taking their toll.

Investors are torn between betting on the Bulls or going with the Bears. The game isn't over yet, but the economy will eventually defeat itself. The better the economy gets, the more it will force the Fed to raise interest rates. The Bull market will continue until stocks become grossly overvalued, and high interest rates strangle economic growth. Then the Bear market will come, and the cycle will begin anew.