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Stocks Are Weak but No Correction Yet

Stocks are weak, but we can't even get a 5 percent selloff...yet.

Stocks weak today, and with a close on the S&P 500 of 1432.56, it's the lowest close since September 6. (Read more: S&P Logs 4-Day Loss on Global Growth Fears)

Still looks more like "buy on the dip" than "get me outta here." One oft-watched indicator, short interest, is down. The most recent data (published every two weeks and released last night) indicates that short interest is near multi-year lows.

Short interest as a percentage of the float (SIPF) dropped to 5.9 percent (from 6.1 percent), according to Paul Hickey at Bespoke Investment Group. Nine of ten S&P sectors saw a decrease in SIPF, only Telecom Services saw an increase. Short levels for financials are at a 52-week low.

Remember, these are often used as contrarian indicators. High levels of short interest represent stocks that must be bought back, and so is often seen as a bullish indicator; low levels of short interest mean that there are not a lot of shorts to buy back stock, and is looked on as bearish. (Read more: Stock Market Rally Over? Pros Are Split)

Ah, but a lot of old Wall Street chestnuts don't work anymore. This one might be one of them.

Why not a lot of shorts? Well, ask them yourself—but surely everyone has noticed it is an ugly game to bet against the Fed.

There are plenty of traders that want to see a modest selloff of 5 to 10 percent, but only because they want to buy lower to catch up on their underperformance, not because they are aggressively short the market.

This is a major reason why it is so tough to get a significant correction, even in the face of global economic weakness.

Heck, we are only 2.9 percent off the 52-week high in the S&P that we hit on September 14. (Read more: 'Lost Decade’ for Stocks? I Don’t Think So)

—By CNBC’s Bob Pisani

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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