As always, the true contrarian embraces uncertainty optimistically, reasoning that most of these concerns have been incorporated and digested in the recent market weakness. To me, this means that if any of these negative catalysts feared by an increasing body of market players actually occur, their market impact may be anticlimactic.

Here are some of the well publicized headwinds of the last few months that I have highlighted.
  • Global Growth Slows -- Mixed and uneven data suggested that global economic growth headwinds would not result in the expected second-half acceleration in GDP.
  • Emerging Market Concerns -- Investors, anticipating higher U.S. interest rates, have disintermediated emerging markets, serving to rock the economies of countries that rely heavily on foreign investment (e.g. Indonesia and India).
  • QE Loses It's Effectiveness -- Growing evidence that excessive easing is a blunt tool to catalyze growth.
  • Fed Tapering -- It has grown increasingly likely that a September tapering is in the cards.This, too many (including myself), would qualify as a policy mistake (owing to the domestic economy's inability to reach escape velocity.)
  • Still Tepid EPS Growth -- Disappointingly slow corporate profit and sales growth, particularly excluding financials.
  • Rising Interest Rates
  • Valuations Stretched -- Expanded price earnings multiples in the face of weak sales and earnings growth.
  • Growing Geopolitical Risks -- The growing likelihood of a U.S. military attack on Syria.
  • A Divided Washington D.C. -- A heated debt ceiling debate looms ahead.
  • An Imminent Tapering -- Subject to data.
  • The Fed -- Uncertainty as to who will be the next chairman of the Federal Reserve.
  • Weak Technicals -- There were numerous troubling technical signs that were being ignored.

While I continue to subscribe to the notion that the year's market high has been put in, the contrarian in me says the markets could lift somewhat (and could even threaten the July highs) and certainly not drop precipitously (as many increasingly expect) during the months of September and October. (Already the Asian and European markets, as well as our S&P futures, are responding well to the president's decision on Syria and to the economic data in the EU and China).

Being Bearish over the intermediate term, as I still am, does not mean there won't be trading opportunities on the long side - though brief it might be.

One such trading opportunity could be upon us now.

Some Headwinds Have Now Become Modest Tailwinds

At the core of my slightly-more-constructive near-term view is the administration's "go slow and go limited" policy in Syria (Note: In " Syria, Oil and Global Markets" I suggested that Syria would not be a serious impedient to the stock market's potential advance), some recent strengthening in global growth data and, as characterized in my opening quotesof Ralph Acampora, a sharp pick-up in negative sentiment from talking heads, technicians, strategists and business commentators.  

I strongly suspect, with the aforementioned headwinds, some bad bearish bets have been put on as cash reserves have been increased by the dominant investors (hedge funds) as well as other institutional investors.

On Syria, the President's surprising decision (to investors and to his advisers) to seek a Congressional authorization for a military strike can be viewed as a market positive. (While debate will start this week, a vote in Congress will not likely occur until the middle of next week). 

While Syria has gained the headlines, several measures of economic growth have modestly improved (albeit not enough to encourage me to materially change my economic and earnings outlook for the balance of this year and for 2014). 

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