Are we on the verge of a full-blown bull market? Maybe, but keep in mind that the past 12 months have seen a multitude of miniature bull markets, all of which hit a wall.

For the first part of the past year, however, the market acted fairly normal. From late October 2010 to Feb. 18, 2011, the S&P 500 spiked 13.6%. Then, from March 16 to April 29, the market rallied by 8.5%.

But beginning in the summer, the market went haywire. From June 15 to August 22, the markets saw three up-or-down moves of at least 7%. Now, since Oct. 3, the market has soared by almost 17%.

With such volatility, it would seem inevitable that top traders, like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), would make huge sums, right? But this hasn’t happened. The companies are actually finding it extremely tough to make any profits.

And even the world’s top hedge fund managers are lagging, such as David Einhorn and Bill Ackman. The HFRI Hedge Fund Weighted Composite Index is off 5.3%.

But the most notable loser is big-time investor John Paulson. Despite having made billions from 2007 to 2010 – by doing things like shorting subprime mortgages and buying the SPDR Gold Shares (NYSE:GLD) – he’s had a horrendous 2011. His flagship Advantage fund is down by 32%, as of the end of September. Like many other hedge fund managers, he believed the U.S. economy would rebound and that there would be continued opportunities in emerging markets, such as China.

Yet the recent “breakthrough” in Europe could mean more stability and the markets getting back to normalacy? However, that agreement is still light on specifics, and it doesn’t really deal with the issues in Italy and Spain. What if these countries start to crater?

At the same time, the U.S. may have its own debt crisis. Keep in mind that Congress’ super-committee is required to make some tough choices by the weekend of Thanksgiving, even though it looks like there is serious deadlock. Might this lead to another downgrade to the US sovereign debt?

In other words, with the S&P 500 getting euphoric once again – even in light of many lingering problems – investors should be cautious. As the past year has shown, the markets can get suddenly cold.

Tom Taulli runs the InvestorPlace blog “IPOPlaybook,” a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As
of this writing, he did not own a position in any of the aforementioned stocks.