This is an absolutely crazy market! The growth indices were right on the edge of breaking down further after declines of almost 11%. But we got a little relief from long rates, so someone lit some Trinitrotoluene. (OK, we didn't know what TNT stood for either.)

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks fell on Tuesday morning, giving up some of Monday's strong gains, as investors continued to watch bond yields and awaited Senate debate on the stimulus bill, which has already been approved by the House. On the vaccine front, in a deal facilitated by the White House, Merck has agreed to help Johnson & Johnson manufacture additional doses of its coronavirus vaccine. The Dow fell 0.3%, the S&P 0.6%, and the Nasdaq 1.2%. Crude oil traded near $61 per barrel, while gold rose $3 to $1726 per ounce.

Insider sentiment continues to suggest a reasonable degree of caution. As we have said for several weeks now, this caution does not mean that a major correction is bound to occur. But it does suggest that there are few near-term catalysts that insiders see as likely to drive stock prices (around all-time highs already) quickly higher.

A little over a year ago, we asked the following question. Does the stock market have a governor? Since breaking out to all-time highs and completing a cup-with-handle in November, the S&P 500 has been glued to its upper weekly Bollinger Band (BB). BBs are made up of three lines: a simple moving average (usually 20-period), an upper band, and a lower band. The upper and lower bands are two standard deviations (plus or minus) from the 20-period moving average.