City have endured a stuttering season so far, unable to find any real consistency with injuries to key players like captain Vincent Kompany and Sergio Aguero not helping.
As a result of City's failure to dominate the race for the title, speculation has been rife over the future of Pellegrini with rumours abound that Bayern Munich boss Pep Guardiola is set to replace him at the Etihad helm, as reported by the likes of the Mirror.
Two weeks ago: 'City not good enough for title'
Shearer, who scored 313 goals in 622 career games for club and country, has doubted City's title credentials all season, saying they weren't good enough at the back and lacked the right mentality to win the league earlier this month.
He then cast further doubt over the Citizens' chances last week saying key man Yaya Toure could end up costing them the title.
Now: 'They've got a fantastic chance'
But it seems the attacking prowess on display in the win over Palace has forced the former Newcastle United star into an abrupt change of heart in his latest column on Coral.
"If they can keep Sergio Aguero and David Silva fit from now until the end of the season, then they’ll have a fantastic chance of winning the title," Shearer wrote on Coral.
"The one thing that has let Manchester City down this season is their defence, particularly in Kompany’s absence. Having said all that, when you have Aguero and Silva in your team, you still stand a chance because they are still two of the best players in the world.
"The (Palace) win this weekend though does keep them nicely poised as they are just one point off the top of the league now."
Make your mind up Alan
Shearer is entitled to change his mind as the season progresses and it takes a certain amount of humility to admit he may have got things wrong.
But the sign of a good pundit is one who makes the right call and sticks by his predictions in the first place.
Shearer's initial predictions have proved hasty and Pellegrini's side look to finally be finding their feet and fitness in this most open of Premier League seasons.
Indeed City are still on for the quadruple and are fighting on all fronts for silverware.