The bears have discovered some wind for their sails of late as they attempt to push this market down for a fifth straight day. The only problem, is that the pullback has only managed to pull the market a little more than 1.5% off of its rally closing highs from 11/3. If you consider the intraday highs from that day, it is closer to 2%. But still, the sell-off, hasn’t been anything to get excited about for the bears.

I’m not convinced that we’ve reached a top in this market. I let the market show me first that it is starting to break down like it did back in August before heavily shorting stocks, and a 2% pullback off of a monumental rally hardly says that. Considering how close the market is to making new all-time highs, I’ll be surprised if we don’t establish new ones before the year end.

The Fed also doesn’t want to backtrack again from raising rates, and as much as they want to say they are data dependent, they are really driven by the behavior of the market. If the market sells off like it did in August and September, there is a good chance that our not-so-good friend Janet Yellen will be forced to pull back from raising the rates as well.

So whatever it is that the Fed does to keep the market up during the most seemingly impossible of times, I expect them to do it again, if the market starts to fall. Consider this – the Fed has never raised rates when the market is down year to date. And as of this post, the S&P 500 is only up 0.8% on the year. So there isn’t much room for error between now and the December FOMC meeting.  

Here’s the list of short setups: