The market has come so far that the bears have become bulls

It is yet another week of gains across the major indices as the S&P gained 3.3% and the Nasdaq 3.4% to both end their week at all-time highs. Despite the calls that we would re-test the lows or see significant pullbacks, the market just seems to smile and rally on - to the point where those who insisted the market would fall flat on its face now dare not bet against it. Short interest for the S&P now sits at its lowest level for 15 years at 1.8% as many a bear as rushed back into the woods to become a bull.

It is, after all, the bulls who have proved to be right in their mantra of "Don't fight the Fed" - and the Fed came out on Thursday to state that they're not backing out any time soon and the lower for longer interest rate policy is here to stay - presenting not only the catalyst for another leg higher but also presenting a Goldilocks scenario for stocks.

Why is this the case? Well if economic data now disappoints, traders will assume the Fed will continue its accommodative stance - so bad news suddenly becomes good news for equities. Meanwhile, if economic data improves, investors become less fearful and put more money to work in a greater risk-on approach.

Numerous strategists across the street are also becoming more constructive that the Fed are not a fight investors can win and that they will be well rewarded to put their money back to work in equities. Shawn Snyder at Citi Personal Wealth Management believes that the Fed would not allow stocks to have a steep decline from here and that "When investors believe that, it gives them excess confidence and they’re willing to take on more risk and buy stocks even though valuations are high....There are several bears that have thrown in the towel."

Rallies as aggressive as the one we are witnessing are also often what is seen at the start of a new bull market - something reiterated by Keith Lerner, Chief Market Strategist at Suntrust who states that stocks tend to gain 9.2% in the 12 months following a new record high. He also notes that with little in the way of attractive alternatives, investors are increasingly left with few other options. This is a point re-iterated by Evercore strategist Dennis DeBusschere who believes that the combination of negative real rates and elevated levels of retail money in money market funds, means there's plenty of room for the stock market to push higher.

Whatever the next few months may bring for US equities, including the challenge of an election in just 9 weeks time, the increasingly positive consensus for stocks on Wall Street should bring greater confidence to those still willing to jump in at these record levels.