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What? It's Wednesday? After blue Monday and turnaround Tuesday

The stock market's blue Monday turned into turnaround Tuesday, so what about Wednesday?

Traders say the more than 1 percent selloff Monday came and went without any panic, and Tuesday's buyers were looking for bargains. The S&P 500 gained 1.1 percent to 1,838, and the Dow was up 0.7 percent to 16,373.

The Nasdaq set a new 13-year closing high of 4,183, a rise of 1.7 percent led by gains in tech and biotech stocks. The VIX, the CBOE's volatility index, lost nearly 8 percent Tuesday, nearly reversing Monday's gains.

"I do think some of this may have to do with the fact that we have an expiration week. It may be playing with some of these portfolios," said Art Cashin, director of floor operations at UBS. There is a triple expiration of futures and options Friday.


Traders on the floor of the New York Stock Exchange on Tuesday.
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Traders on the floor of the New York Stock Exchange on Tuesday.

Patrick Kernan of Cardinal Capital said the options pits were vastly changed on Tuesday, after Monday's rush by big investors to take on protection against a market decline. Kernan trades S&P 500 options at the CBOE.

"They're selling volatility, meaning there's not a huge concern for a big move. It's a little perplexing to us too. For whatever reason, no one seems to be real nervous, particularly today. Even when we were down (at Monday's lows) we didn't see panic," he said. "It's almost as if it's a good buying opportunity."

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"Right now what we're seeing is the trade is implying we're not going to have any big corrective move in the near future—not that they're correct, but that's what they're implying. I wouldn't feel good about selling them but somebody else does," he said.

The first big day of earnings came and went Tuesday, with little reaction. Reports from Wells Fargo and JPMorgan Chase left those stocks flat on the day. Bank of America reports Wednesday.

"The market seems to be doing pretty well so they didn't do anything to undermine the bullish sentiment. I suspect on balance banking earnings are going to be OK just because of economic conditions," said Mark Luschini, chief investment strategist at Janney Montgomery.

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Fastenal also reports Wednesday morning, and Kinder Morgan and CSX report after the bell. Luschini said rail company CSX will be important for what it says about the economy. "Intermodal travel. Moving things around. ... The transports are always a leading indicator," he said.

Economic data includes PPI and the Empire State survey, both at 8:30 a.m. ET, and the beige book at 2 p.m.

Traders will also be watching Fed speakers—Chicago Fed President Charles Evans at 12:50 p.m. ET and Atlanta Fed President Dennis Lockhart at 5:20 p.m.

Oil and gasoline inventory data is released by the Energy Information Administration at 10:30 a.m. ET.

—By CNBC's Patti Domm. Follow here on Twitter @pattidomm.

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

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

  • CNBC Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.