There are three bullish props under stocks now but they are all seasonal biases – January, earnings seasonal and coming FOMC meeting. Traders are playing the patterns without regard to fundamentals or developments.
The horrid volume is an important clue in this command economy, centrally-planned market.
The negative yield on short-term German sovereign debt is also an important clue as to the state of Europe – even though the media has reported numerous times that the continent has been saved, and stocks have staged several monstrous rallies on that perception.
Wait and watch is still the most prudent course of action, with pruning weeds from the garden a close second. We would also be very concerned with companies that derive a significant chunk of sales from Europe and/or emerging markets. These are the areas where economic contraction should appear first.
BTW, the relentless decline in Chinese stocks is a clear signal that the insiders in China smell huge trouble. If you think that you know more than the insiders in the land of ambiguity, take your shot.