Show posts in a list separated by day

Add a variable to hold the previous post’s date, and then add a <br /> or something when it changes.

<?php
    $prev_date=""; // initialize to empty string
    query_posts($query_string.'&cat=-3');
    while (have_posts()) : the_post(); ?>
        <?php if( strlen( $prev_date ) > 0 && get_the_time( 'M j' ) != $prev_date ): ?>
            <br /> <!-- or whatever you want to use to separate your date blocks -->
        <?php endif; ?>
        <span class="date"><?php the_time('M j') ?></span> - 
        <a class="title" href="https://wordpress.stackexchange.com/questions/94342/<?php the_permalink() ?>"><?php the_title(); ?></a>
        <?php $prev_date = get_the_time( 'M j' );
        ?>
<!-- continue on with The Loop -->
    <?php endwhile; ?>