One factor that pushed the market higher on Tuesday was Morgan Stanley's "Full House Buy" call.  It has a strong track record.

I agree with the call.  I was buying heavily late last week and on Monday and am as long as I have been in years.

I am working from the thesis that we have seen the bottom for 2008 and that we are in the midst of a sharp relief rally.  The violent sell-off in September and October was more of a financial event due to forced de-leveraging of financial assets than an economic event. This bounce is an unwinding of that liquidation.

My target is 1075-1125 on the S&P 500, though I am looking more to the upside of that range.  I am expecting that when we hit those levels, the market will go and re-test the lows, either within a few weeks or in late-February or March of next year. 

Everyone knows that fourth quarter GDP is going to be awful, with the print perhaps being -4%.  The first quarter of next year will also be negative.  The market has already priced this in and more.  But I do not know if the market has priced in further economic weakness beyond that.  In my framework, realization of weaker than expected economic growth in the second quarter and perhaps all of 2009 will weigh on the market, causing another re-test of the lows.

We may hit new lows next year but the market may also bounce along the October lows, tracing out a long, drawn-out, multi-year bottom.

Of course, I could be totally wrong.

But for now, the path of least resistance is to the upside.