Since warning about a possible upside surprise in my last entry, the market has done just that, closing above the critical 1105 level today. Then, after the close, Chairman Bernanke and Co. raised the discount rate in a surprise move to .75%.

It wasn't a surprise that they did it. They telegraphed as much in their latest ramblings. The surprise was that they did it between meetings. This may be a preemptive strike against an overheated CPI report that will come out Friday morning. The Fed gets those numbers early. Whatever the reason, this changes the environment a bit.

I'm aware of the Elliott 3 of 3 of something count that everyone's watching....and that's the problem. Everyone's watching it, and expecting it. That's usually not a great recipe for it actually happening. Sort of like that H&S pattern everyone saw in July. Remember that one?

So we're about to find out if it's a valid count. If the market holds up and moves higher in the next few days after this Fed action, it'll be signaling to me that the top is a ways off yet. If this happens, don't make the mistake of saying the market's wrong. The market is never wrong. Only traders are wrong....whenever they're aligned against the market.

So be open and don't dig your heels in. If the 3 of 3 is here, it'll be obvious very soon. If not, go with the market you have, not the one you want.