We have been pointing out the correlation between equities and crude oil and have mentioned that stocks will need a turnaround in the crude pit in order to get a rally going. However, as it turns out...all that the market needed was for crude prices to stop going down. With the August crude contract trading near unchanged for much of the day, a green light was given to buy equities ahead of the bulk of the earnings season.

It seems as though much of the day's buying was short covering and/or buy stop running. Accordingly, it doesn't necessarily mean that investors are expecting positive earnings, but what it does indicate is that the bears are a bit concerned over the possibility of less than horrific earnings.

Most stock market journalists and commentators are attributing the day's gains to comments made by market analyst Meredith Whitney who claimed that Bank of America shares are inexpensive based on the firm's assets. Whitney is highly respected by the bears in that she has offered one of the more pessimistic, and later we discovered accurate, assessments of the banking business. Accordingly, those short bank shares scrambled to exit their positions by buying the shares back. The buying frenzy bled into other sectors and light volume allowed the rally to extend beyond what many thought possible based on last week's trade.