We have seen a number of seasonal influences in recent days, which should start to abate now. On the negative side we have had selling of winners, likely a result of investors delaying capital gains until 2011 and the undoing of year end markups. On the positive side we have had beginning of the year inflows. As these factors abate we should find out which way this market is headed.
The S&P futures were selling off hard overnight but have pared the losses on a very positive ADP employment report. The report is clearly a surprise as treasuries are selling off. However, I would note that markets generally top out on good news, not bad.