Stock Market -- Need We Run It By The Fed Again?

As 2013 ran out, a goodly number of investment managers dressed the windows to show
higher equities exposure. Thus, both the Sugar Plum Fairy and Santa delivered rallies. The
market went out on a high note, was both extended and overbought short term, and, my
investor / advisory composite sentiment indicator closed out at a too bullish 66.0. With the
new year, some players can be excused for stepping up to take profits. So, maybe we are
now witnessing a normal bit of retrenchment after a dream year end close out.

Still, the Fed's first FOMC meeting comes up in late Jan. and it may also be reasonable to
expect some volatility in the next few weeks as players decide how aggressive they want to
be, especially with a new chairperson expected at the helm. Will the Fed elect to taper more
or not? Does it even matter? Such questions could take on a little more urgency as the month
wears on and especially so for the bulls whose primary focus has been the powerful QE
program.

Here is the daily SPX chart. Note how the VIX volatility index started moving up during
the final surge in the market for 2013.