We have some reflexive dip-buying on the weak open and a little bit of a short squeeze to help matters. The news didn't suddenly improve; we just had a little too much negativity and that set us up for a bounce.
The question now is whether the buyers have enough juice to keep on pushing. As long as we stay above the early low of $114.44 on the SPDR S&P 500 (SPY), I'll be looking for traders to maintain a long bias. We are oversold enough to make shorts dangerous and to support some upside in stocks that have been hit hard lately.
The most important thing is that you treat the action simply as a bounce and nothing more at this point. It could develop into a turning point, but it is premature to jump to that conclusion. Right now the bears are suddenly out of position, and that is helping to give us some upside momentum.
I'm doing a little buying. My biggest new buy is fertilizer play CVR Partners (UAN). The sector has shown some relative strength lately, and I like the early volume and the move toward all-time highs.
VirnetX (VHC), which I've mentioned a number times as my sympathy play on the InterDigital (IDCC) auction, is attracting some attention and I added a little there.
I have my eye on a few other things, but I want to see how this market acts on a pullback first. This feels like a very routine Monday-morning bounce, and I want the bulls to demonstrate that they have a little staying power.