I am not exactly going out on a limb, but let me say this about the circumstances in Syria: Missile strikes will not be the stock market’s downfall. Granted, the short-term trend toward higher oil prices is a thorn in the paw of consumption; consumer-oriented stocks may struggle a bit. However, the recent momentum in “black gold” is more likely to wane. For that matter, the White House can always counter with the use of U.S. “strategic reserves.”

The real trouble for stock assets? Housing. The move from a 30-year fixed circa 3.4% to 4.8% is responsible for 2 consecutive months of pending home sales declines as well as significant decreases in refinancing and new mortgage origination. Worse yet, home prices are likely to stall, adversely affecting the “wealth effect” that has been the primary driver behind consumer spending habits.

Does it have to go this way? Not at all. The Fed may recognize that it can afford to wait until after the markets absorb a transition to a new chairperson. After all, with the 10-year yield at 2.75%, way beyond what May’s “taper talk” had intended, why rush to make a substantive change?

That said, if investors continue selling income-oriented holdings in anticipation that the Fed will exit (or eventually taper) its bond purchases, there is very little chance that corporate shares will be able to withstand the increased selling pressure.  Flat revenue, flat earnings, uneven economic news, debt ceiling debate in Congress — stock prices will have a much more difficult time climbing the proverbial “Wall of Worry” if real estate is stuck in neutral.

It has been nearly 2 years since the broader S&P 500 SPDR Trust (SPY) pulled back more than 10%. SPDR Homebuilders (XHB) can be used to gauge the probability of whether the 23-month rally in stocks will continue or, conversely, whether we will witness a genuine health-restoring correction. If XHB cannot climb above and stay above its 200-day moving average — if it suffers a larger fall from grace — this would likely indicate trouble for the ultra-low interest rate fueled bull. If XHB fails, I would expect SPY to retreat to its 200-day trendline as well. (Yes… that’d take SPY down to the 155 level.)

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