Risk is on so far this holiday week, but the bigger question is how long will that trade work.
The dollar fell and commodities were mostly higher as the Dow climbed Monday to its highest level in more than a year. Treasuries were a mixed picture, with buyers pushing yields in the long end lower. The Dow rose 132 to 10,320, while the S&P 500 climbed 14 to 1106. Gold continued to shine, closing at a new high of $1164.30, an increase of 1.6 percent, but oil was just barely higher at $77.48 per barrel.
A jump of 10.1 percent in October existing home sales added fuel to Monday's rally.
"You have people wanting to buy Treasurys for yearend balance sheet purposes, and you have a Fed that's not moving, so people are buying everything," said Joseph LaVorgna, chief economist at Deutsche Bank.
Tuesday's calendar is heavy on news about housing and the consumer, plus there is the revision to third quarter GDP. The Fed's Nov. 4 meeting minutes are released at 2 p.m. and the FDIC gives an update on banks and bank earnings. There is an auction of $42 billion in 5-year notes at 1 p.m.
Fed minutes are being watched carefully both for an economic update and any inkling of what Fed policy makers are thinking about what could trigger a move in rates. The Fed's last statement signaled the market that there are no changes coming from the Fed any time soon, which is conducive to the risk rally.
The S&P/Case Shiller home price survey is released at 9 a.m. while consumer confidence is reported at 10 a.m. GDP is released at 8:30 a.m.
Economists expect to see GDP revised to show growth of 2.8 percent, down from the initial reading of 3.5 percent. LaVorgna's estimate is for 3 percent. "I've got a downward revision, largely on the back of softer construction spending and a wider trade deficit," said LaVorgna. He said one wild card that could add to the number is capital spending, which was surprisingly weak in the first report.
"The other thing you want to look for is we get the first read of economy wide corporate profits. In the first half of the year, corporate profits grew at a nearly 20 percent annualized rate. I think you're going to see a pretty good corporate profit number based on the fact that nominal GDP went positive," he said.
Traders are split about how long the tightly linked risk trade will work. Steve Massocca, managing director at Wedbush Securities, said Monday that he's hedging his bet and is beginning to short assets that benefit from the trade.
"The dollar is getting close to 2008 lows, and it could start to become bad news, and you have to prepare for it," he said. "We haven't taken the plunge yet but we're starting to nibble on the idea that the dollar going down is no longer going to create levity."
He said he still has long positions, and one of his favorites is in dividend paying stocks. Some of the names he likes are Kraft , Heinz , AT&Tand Verizon . Telecoms, in fact were the best performing of the S&P sectors, gaining 2.6 percent Monday. The worst performer was consumer discretionary, up 0.9 percent.
Massocca said he is not playing the retailers this holiday season. "It's a bifurcated market," he said of retail names. He said both ends of the spectrum - high end and discounter - should do better than those in between.
— Questions? Comments? marketinsider@cnbc.