As of 7/25/2014, the S&P 500 is up over 7% YTD. That’s on top of last year’s 29.6% gain. It’s enough to make some people nervous.

I believe an important consideration that seems to have eluded the Breaking News focused media, is the reduction in the Fed’s bond-buying program to $35 billion. The program has already been reduced from a high of $85 billion/month, with five straight cuts of $10 billion each month since November. I think the dramatic reduction in the bond-buying program greatly reduces the risk of unintended consequences of continuing large purchases in the unprecedented program.

But there is another shoe to drop, and that’s the eventual rise in interest rates. As long as fundamental indicators continue to improve, the market should be able to sustain current “normal” valuation levels despite higher, but “normal” interest rates. Steady as she goes.