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Same Old Story - If it wasn't already more than clear over the past several years, months and weeks, price action over the past several days has certainly sealed the deal. There is absolutely nothing else driving the US equity market and risk assets other than Fed policy. In fact, the direction in the entire global financial markets is contingent on Fed action or inaction. In recent sessions, we have barely seen any pullback at all, and the market continues to push to fresh record highs. Though there have been many headlines in September and October that could easily be weighing more significantly on US equities, the market has easily shrugged off each one of these risk negative stories on the expectation that this only means the Fed will do nothing in the way of reversing policy.

Wait For The Break - Last week, I had highlighted 1740 as the key level to watch below in the S&P, and yet, even though the level was a stone's throw away, it was never breached and we continued right into the end of the week to test fresh record highs. Yet, this price action is now more unhealthy than ever, and it almost feels like it is all about to unravel. I am really not sure how much more can be priced in at this point, with the markets now fully prepared for the Fed to stay on hold well into 2014. So with this fact behind us and no other fundamentals truly supportive of risk assets, how much more can we run before bulls smell the end of the line and decide to head for the exit? Surely it can't be much longer. Still, selling the rally has not proven to be an effective strategy, and instead, I prefer looking to sell into a downside break. S&P 1740 is that key level to watch this week, and should we manage a break, I would then recommend taking another shot. Until then, keep that cash on the sidelines.