Earnings expectations are also lackluster and have actually been negative for the longest period since 2009. Third-quarter profits for the S&P 500 declined by 0.7 percent and are expected to slide by 0.3 percent in the fourth quarter, according to Thomson Reuters.
For that reason, strategists say a pullback is possible and even if stocks do see new highs next year, the bull market may not run as long as it did in past cycles.
"Usually the first Fed hike of the cycle coincides with some volatility, a midcycle correction, but it doesn't coincide with a major top in the market," Wald said. "It would be consistent to see some weakness in the first quarter. In general, we think the uptrend, the trend in the market in general is going to start to moderate looking out to 2016. You're going to need some period of weakness, more moves sideways for that moderation to be achieved."
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Wald examined market reactions after the first rate hike, and found that only three times going back to the 1950s was the market negative a year after the first rate rise.
"The Fed tends to hike during healthy periods in the stock market. This is different this time, given we could be going in with some volatility," he said.
"We've broken a four-year uptrend over the summer. the volatility was technically damaging," said Wald, adding a lot of stocks bounced back since.
Jim Paulsen, chief investment strategist at Wells Capital Management, said the Fed doesn't usually hike at this stage in the economic cycle, and its been six years since the recovery began. The central bank took interest rates to zero in 2008, in the thick of the financial crisis.
Markets are also not as welcoming as the Fed might like. "It's scary. The Fed might raise rates with very wide (credit) spreads ... I think it might be (stocks) struggle after that. There's no way we're going to have really rapid growth, so it's almost right at the cusp of being OK to weak," Paulsen said.
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If the market does get a year-end bounce, Emanuel said the leadership will have to expand for it to continue moving higher.
He said he is watching the ISM manufacturing data Jan. 4 and the December employment report, which he believes could set the tone for January's markets.
"If the ISM turns around, we're likely to have a broadening of the market leadership. That's what we need to have happen to keep the rally going. ... We want to be wrong in our belief that the leadership of the market is going to remain narrow," he said. ISM has been under 50, a sign of contraction taken by some to be a recession warning.
"When we look at the first half, if the data falls into place, we think the market could overshoot in the first half. We suggested you could see a trade up to 2,500 in the S&P in the first half. That's counting on the public embracing the message from the Fed," said Emanuel. He also expects a surge in merger activity, as corporate America will rush to get deals approved early in the year, ahead of the presidential election.