Stocks are at a pivotal point that has some traders looking for a pull back but others afraid to be caught short.
Tuesday's market was quiet, meandering a little above, then a little below the key 1000 level on the S&P 500. The Dow closed 33 higher at 9320, and the S&P closed at 1005, up 3, its second day above 1000 in 10 months. Financials were the best performers, up 3.7 percent.
"What you really have is money that's been on the sidelines starting to gently come in, and more of a willingness to take on some risk," said Pete McCorry, who trades bank stocks with Keefe Bruyette.
As stocks finished slightly higher, bonds were off as the dollar firmed and oil weakened. Metals, like gold, silver and platinum moved higher.
"They're absolutely going to test any support you have in 1000, and most certainly 950" said McCorry. "You have not seen volume confirmation in this part of the rally...so you would think they have to give some back."
From Mad Money
Doug Prskalo, who trades S&P 500 options at the CBOE, said he's seeing a lot of short covering. "There's a roll of the dice coming up on Friday with the unemployment number and the cash for clunkers bailout," he said, adding that the new fear among investors is about being on the wrong side of a market bent on going higher.
What to Watch
Wednesday's data includes the ADP private sector employment report at 8:15 a.m., and factory orders and ISM non manufacturing data at 10 a.m. Earnings news Wednesday includes Procter and Gamble , Transocean , Devon Energy , Baker Hughes , PG&E , and Polo Ralph Lauren , ahead of the bell.
The late day earnings include Cisco , News Corp , Allstate , Prudential , Murphy Oil and Sunoco .
American Express holds an analysts' meeting at 2:30 p.m.
The CFTC holds its third and final hearing on energy futures trading, and the Senate Banking committee holds a hearing on proposes to enhance regulation of credit rating agencies.
The ADP number is considered a kind of preview of the government jobs data Friday but it does not always correlate. The number is expected to come in at a loss of 350,000 jobs. The government's Friday jobs report is expected to show the loss of 275,000 jobs, compared to last month's 467,000. The unemployment rate is expected to reach 9.7 percent.
J.P. Morgan economist Michael Feroli said there could be a surprise in the ADP number. In a note he said there's a quirk in how ADP processed the number and that modeling factor could impact the results by 60,000. One part of the equation is the massive layoffs and then rehiring by the auto industry. Another factor is how ADP changed its process last December. He said the ADP number could have been negative 275,000, but it may come in much better.
He expects the government jobs report to bring an unemployment rate of 9.6 or 9.7 percent.
From Mad Money
"Given the pickup in the weekly auto production data, that should be positive...also in the manufacturing sector more generally," said Feroli. "We think it will be a terrible report but better than consensus."