Not so long ago, November 18 to be precise, I wrote that the rally was still firmly in charge.

Right now I’d take out that word “firmly.”

I had thought that when the Standard & Poor’s 500 closed above 1110 on November 17 stocks were done consolidating and had definitely broken out of their trading range between the October low of 1025 and the October high of 1098.

I was wrong. With the U.S. dollar strengthening the index has pulled back instead of moving ahead. Stocks now look like they have more work to do before they can move higher.

It is a good sign for a continuation of the March rally into December that on this pullback the S&P 500 has stubbornly hung above support at 1088-1089. On November 20, for example, the index closed at 1091.

There’s deep support near this level. The next support below 1088 for the S&P 500 is at 1082-1084.

But the market has shown a worrying lack of leadership in recent days. Technology stocks (especially chip stocks), small cap stocks, financials, and energy stocks—the leaders in the rally from the March low—have all looked weak in the last few days.

The market leadership, such as it is, has switched to large cap stocks, consumer staples, and health care. These are all defensive sectors and most of the time when they lead it’s an indicator that investors have become nervous and are seeking safety.

It would take much to see leadership rotate back to exactly where it was. If the dollar were to stop climbing and go back into decline, I think we’d see money move back to energy stocks, for example.

What’s more worrying to me for the long short-term, that is the period from now to the end of the year, is some data that suggest that cash has started to move from stocks and commodities into short-tem U.S. Treasuries. Particularly pronounced, oddly, has been the move into very short-term Treasury bills, those just long enough to mature after January 1. This suggests to analysts who watch bank balance sheets that we could be seeing bank aggressively looking to dress up their balance sheet with low risk treasury bills for the end of the year close of their books.

If that’s so, cash flows into stocks and commodities and other asset classes will be weaker than I expected over the next six weeks. I’ll be spending part of the weekend looking at these numbers and I’ll have more on this on Monday.

Please, please, do remember that all this is speculation about the very short-term, the next six to eight weeks. I offer this commentary not because you need to do something DRASTIC about it SOON, but so you’ll have some chance of understanding the short-term ups and downs of the stock market.

And so you’ll be able to distinguish between those twitches and the larger forces that should mold your stock portfolios now. The big question remains how strong the economic recovery will be in 2010.