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Markets are also watching developments around Greece's efforts to strike a deal with creditors. There's a Eurogroup meeting in Brussels on the matter at 1 p.m. ET Wednesday. Risk markets have rallied this week as traders bet there would be a deal that averts a Greek exit from the euro zone.
The Dow was up 24 on Tuesday, at 18,144, and the S&P 500 was 1 point higher at 2,124. The Nasdaq, however, gained 6 points to a record high of 5,160.
Treasury yields also rose Tuesday as markets looked past Greece, but also as a big Heinz debt issuance pressured Treasury prices. Strategists say the move in yields was a bearish change in momentum, after the flight-to-quality trade that drove rates lower last week. The 10-year was yielding 2.41 percent late in the day, and several strategists said its next target is about 2.50 percent.
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"I don't think it's going to be a steady rise in rates, but I do think the worm has turned," McCarthy said. There is a $35 billion 5-year auction at 1 p.m. ET.
John Kosar, chief strategist at Asbury Research, said he's watching the action in the Nasdaq composite to see if it confirms a breakout. The Nasdaq returned to 5,133 for the first time in 15 years last week.
"Markets basically expand, then they compress," he said. "Right now they're really compressing, which tells you we're going to get an expansion. The $64,000 question is which way."
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Kosar said he's concerned by Nasdaq. "For me, I want to see it start trading above the 5,133 level for a week or two and start holding it as a support level," he said.
Kosar said the Nikkei, at a 15-year high is up against the important level of 20,833, the equivalent of Nasdaq's 15-year high. "That's been positively correlated to the S&P since 2007," he said. "You've got that and you have topping, declining technical conditions apparent in the London FTSE and Hang Seng."
He said a number of correlated global markets are showing signs of a near-term peak. "Does that mean you sell your stocks and hide under your bed? No … we're telling clients to be a little more defensive than they normally are," he said. "This is a seasonal time of year, and everyone praises the seasonals when they work and writes it off as an old wives tail when it doesn't."
Stocks typically underperform in the summer months before turning higher in the fall and outperform for the fourth quarter.
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What to watch
7 a.m.: Weekly mortgage applications
8:30 a.m.: Third reading of first-quarter GDP
10:30 a.m.: Oil inventories data
1 p.m.: Treasury auctions $35 billion 5-year notes; Eurogroup meets on Greece.
Earnings are expected from Monsanto, Lennar, Bed Bath & Beyond, HB Fuller, Apogee, Steelcase, Worthington Industries and Herman Miller.