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Editor's Note:

(December 15, 2013)

The U.S. stock markets have had an incredible year. The S&P 500 index is up +24.5%. The NASDAQ is up more than +32% year to date. Yet fears that the Federal Reserve might taper their QE program sooner than expected have overpowered bullish sentiment, at least on a short-term basis. The average mutual fund and hedge fund managers has drastically underperformed the broader market. They need to chase the market higher. Yet investors are hesitant to launch positions ahead of this Wednesday's FOMC decision and statement.

Odds are that stocks could see a sharp sell off if the Fed does announce a taper on Wednesday. We have certainly heard multiple analysts suggest that a taper is baked into the market. Another suggestion is that if the Fed tapers for the right reason it would be good for stocks. That might be true. Yet stocks could still see a short-term sell off that slices through support only to bounce back. Thus we are reluctant to add new plays tonight in front of Wednesday's FOMC statement.

On a positive note I am encouraged that congress has agreed to a two-year budget deal since that's one less black cloud on the horizon. Let's just hope the Senate votes to approve the budget deal on Tuesday.

Normally I would provide my radar list of symbols in this section but if the Fed does taper on Wednesday the list could prove worthless. Wednesday and Thursday could be volatile sessions for the market. It might be best to just take a step back away from stocks this week and see how the dust settles next weekend.