This morning's rather weak bounce turned into a big short squeeze of financials in the afternoon. Some inside buying at BAC and a big reversal in USB sparked the group and sent the shorts to the sidelines and the momentum players chasing.
As the day progressed, energy and commodity-related stocks heated up as market players sought out exposure that wasn't quite as volatile as the financials and maybe had some better fundamentals.
Volume was a bit light but breadth wasn't too bad. However, given the extent to which we have been hit lately, the action probably still isn't much more than just a decent oversold bounce.
I'm certainly not convinced that financials are out of the woods, but the immediate issue for the market will be earnings from the likes of AAPL, GOOG and MSFT. The reaction to those reports is going to determine if this bounce has much more life to it.
We are beaten down enough and expectations are low enough that buyers are likely to be lurking about. The bigger picture is still iffy of course, but given the strength today it's obvious there is some desire to get busier on the long side.