Bulls Stage a Comeback

On the New York Stock Exchange 4.89 billion shares changed hands, as decliners matched advancers. Volume on the Nasdaq reached 2.70 billion shares, with losers outpacing advancers 8 to 7.

Paul Mendelsohn, chief investment strategist with Windham Financial, said that despite the poor technical side of the market, traders may not feel the gloom and doom any longer.

"Not much has changed since Friday, but all we've been hearing is that things may not be that bad," said Mendelsohn. "We were overdue for a bounce, but the advance-decline line was poor. There were more new lows than new highs. There still seems to be plenty of money out there, and that is flooding the system with liquidity."

Crude prices plummeted just a few days after setting an all-time record close of $78.21 a barrel. The September crude contract spiraled $3.42 lower to finish the day at $72.06 a barrel. Gasoline prices were lower by 10 cents at $1.92 a gallon.

"Oil's decline definitely gave a lift to the market," Mendelsohn said. "We peaked in August last year and in September the year before, so it's plain to see a seasonal top at work. Oil is overbought, so it was time for everyone to get to the exit."

The market was able to erase the dreary end of Friday's session, when stocks took a late drubbing as a host of housing and mortgage-related stocks crumbled under the pressure of negative news from American Home Mortgage (AHM Quote - Cramer on AHM - Stock Picks) and Bear Stearns (BSC Quote - Cramer on BSC - Stock Picks).

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