Reaction to Selloffs

You can glean valuable information on the strength of a market by how it reacts to a one day selloff.  The strong markets, like the S&P will shrug it off and use the down day as a spring board to higher prices.  That is exactly what happened.  You didn't even get a gap fill on Tuesday, and today we hit all time highs.  Despite the high bullish sentiment, you can see markets continue to make new highs.  It happened in March and April of 2010, and also January to May 2011.

Of course, the higher this market goes, the more potential downside builds.  At the earliest, I don't see a top till early February.  At the latest, mid March.  That being said, I only see upside of about 30 S&P points, or up to S&P 1875.  And downside much greater, down to 1750.  So still in waiting mode.