Rising stock prices are acting as a powerful magnet, prying loose fresh cash and drawing it into a market that's 58 percent above its March lows.
The Dow Wednesday rose 1.1 percent, or 108 to 9791, while the S&P 500 jumped 1.5 percent, or 15 to 1068, and the Nasdaq was up 30 at 2133. Since the lows of March, the Dow is up 49.6 percent, the S&P is up 58 percent and the Nasdaq is up 68 percent. The Russell 2000 is up 80 percent. As stocks rose, bonds sold off, the dollar hit a new year low, and commodities climbed. Gold was at $1,018 an ounce, inching closer to its all time high of $1,033.
Financial stocks led the charge, with a 3.4 percent gain, followed by energy's 2.3 percent rise, and consumer discretionary stocks, up 1.9 percent. Big blue chip names, like General Electric and IBM continued to break out, and there were 171 52-week highs on the NYSE, the largest number since October, 2007.
"The stock market keeps going up because there's such a diversity of opinion," said Andrew Busch of BMO Capital Markets.
"The news is good. The overall thing with the stock market that I emphasize to everyone is that you do not fight the Federal Reserve. The Fed is pumping so much money into the system that it's beneficial for the stock market - bottom line...The time to buy is always when the Fed is easing."
For Thursday's markets, traders are watching the weekly jobless claims number and housing starts, both at 8:30 a.m. The Philadelphia Fed survey is released at 10 a.m.
"We had a big move down in the last week's claims for the prior week of Sept. 5, and we're expecting a little bit of a move back up," said Michael Feroli, an economist with J.P. Morgan.
He expects the claims to come in at 555,000, compared to last week's 550,000. He said the number is affected by the Labor Day holiday.
Two companies that are often looked to for signals on the broader economy - FedEx and General Electric - both are expected to make news. FedEx reports earnings before the bell, and GE holds an analyst meeting. GE is the parent of CNBC.
Oracle's after the bell report could dampen some enthusiasm in tech Thursday. Oracle profits rose 4 percent but sales were below expectations. The stock moved lower in late trading.
- Oracle Earnings in Line With Forecasts, but Shares Slide
While traders and analysts continue to look for a correction, stocks keep rising. Traders say there is a lack of selling pressure, and buyers continue to step in, creating short term leadership in different sectors. They also say fund managers that were waiting for a pull back before investing more money may be feeling pressured to act before the end of September.
John Roque, technical analyst at WJB Capital, pointed out during that volume Wednesday was strong and advancers were beating declining shares by five to one.
"GE up this strong is hard to think the market comes in," he said during the trading day. "That's a plus. In addition, the financials are up 3 percent. It's hard to come in if the financials are up this much."
NYSE volume was 1.6 billion, above its recent average of about 1.2 billion shares.
More From CNBC.com
Wednesday's move was also technically significant. Traders have been watching the 1050 to 1060 range on the S&P, which encompasses the 50 percent retracement level.
Roque said 1060 "is only significant on the idea that everybody seems to be looking to that figure." He noted that many hedge funds still are not long enough.
"This is now the ninth day in a row of breadth advances beating decliners. That's a very strong and long winning streak. That doesn't mean it can't continue. We just think you're probably at the upper limits of the rally because you've gone for nine days in a row," said Roque.
Jordan Kotick, Barclays Capital global head of technical strategy, said the 1050 to 1060 range is especially key because it is important from both Eastern and Western market perspectives.
The Ichimoku cloud charting system is a momentum-based system that originated in Japan. It currently shows an important level for the S&P 500 at around 1053, which the index crossed Wednesday.
"It's got to be a weekly close. We've got to the end of the week up here, but we think we'll do it," said Kotick.
Roughly the same level is important and has been watched because it is a 50 percent retracement level. Cloud charting is a trend signal, while the retracement level is a pivot point.
"A bullish sign in this indicator often carries some weight," he said. "From the Eastern perspective, it would likely trigger new buying and add evidence to the Eastern appetite for risk generally."
The signal has already occurred in other markets. For instance, German and French stocks, and the Nasdaq have all seen the same trigger.
"We take the same market and divide it into three time zones, and we like to see who is leading, and what signals are going to get triggered. Very often, Asia leads. That's why its area is so important on the S&P," he said.
Kotick said there will be signs when the market is getting ready to reverse. "Rotations start to falter. International rotation starts to falter. What markets are leading start to falter. You'll see the signs in other asset classes - forex and commodities," he said.
What Else to Watch
- Treasury Secretary Tim Geithner attends a roundtable discussion with state attorney generals on combating fraud in the mortgage relief marketplace.
- The European Central Bank and Bank of England will have rate decisions before the opening bell in New York.
- The SEC holds a meeting on the topics of flash trading and credit rating agencies.
- Palm reports earnings after the bell.
— Questions? Comments? firstname.lastname@example.org