Did you buy a market index call option in advance of the FOMC announcement on Wednesday? Maybe a straddle? Or did you at least hold pat on long positions knowing that you held an implicit “Fed put” against any meaningful downside? It seems like many investors did one of these, as markets have been strong in advance of today’s announcement.

Monday was yet another up-day for the S&P 500 Index as it reached 1704.95, narrowly missing its all-time high of 1709.67 set in August, but the index closed at 1697.60, up +0.57%. The Dow was also up, +0.77%, but the Nasdaq fell -0.12%

The day’s strength was chiefly attributed to a combination of Larry Summers stepping aside as the likely nominee for the new Fed chief and the signing of the agreement between Russia and the US on a method to require Syria to turn over its chemical weapons to the international control. Summers had been under fierce opposition even from Democrats, after being favored by President Obama.

Needless to say, the news headlines have been dominated by the ongoing saga of President Obama posturing against Syrian dictator Assad and his chemical weapons arsenal. Who’d have thought that Russia would emerge as the cool head in the mix? They must be basking in the limelight -- an unfamiliar role for them.

We’re off to a good start to a new week after last week’s good finish. The domestic markets are up more than 1% midday, based on a possibility of compromise in Syria. Rumors have it that Russia has suggested that Syria place its chemical weapons under international control to avoid missile strikes. Further rumor is that Syria welcomed the proposal.

Too good to be true? Perhaps but does seem like a practical way out of the mess for everyone. At least a possible beginning.

Stocks have shown some resiliency this week as they have made an attempt to recover from last week’s weakness, which was primarily due to the imminent threat of a US strike on Syria. Also, the senior portfolio managers are returning to the fold after taking some time off in late August, and they are likely seeing more opportunities than threats at the moment.

Today’s major indices ended in the black, and we believe the market is more likely to continue to go up than down over the remainder of the year. That said, the market is being buffeted by a number of strong headwinds. 

The Syrian crisis tops the list, with the expected outcome changing almost hourly. Surprises have been frequent. The British decided against involvement. President Obama decided to go to Congress.  Congress is waffling as usual, but Obama is getting a little more support than initially expected.

Stock market bears needed a new weapon to fight off bold bulls, and they found it in the same place that WMD’s often emerge -- in the Middle East, this time in Syria. In this case, however, I’m not talking about a weapon of mass destruction, but rather a weapon of market destruction.

Anxious bulls no doubt are looking for ways to rustle awake this sleepy late-summer stock market, before the bears stealthily bring it down. Investors’ focus has been on the Fed and what it might do next month, and Wednesday’s release of the July FOMC meeting minutes showed almost all the voting members supported no change in stimulus, with only a few hawks insisting that tapering should begin sooner.

Today, the tepid market had virtually no new data from corporate earnings or the economy, and slid lower throughout the day, especially near the closing. But the 10-year bond yield hit a two-year high at 2.9% and closed at 2.88%.

The increase in bond rates should have been expected with the Fed minutes due Wednesday. The market hates uncertainty. However, it is very certain that the longer-term rates will go higher. The Fed’s annual conference with economists begins Thursday in Jackson Hole, Wyoming, without Chairman Bernanke’s presence. Very few new “certainties” are likely to come out of the symposium. The bottom line: It is a bad time for bonds but should be a good time for stocks. 

Bond yields have crept back up to near multi-year highs as the bond market appears to be anticipating some measure of tapering in the Fed’s monthly bond-buying program. This undoubtedly has caused some hesitancy among stock investors, too. And then there are the looming debt ceiling and budget battles, as well as concern about slowing corporate earnings growth. And let’s not forget the comparisons to 1987 we are hearing, with Marc Faber (a.k.a., “Dr.