You can take your pick of reasons why stocks rallied sharply this afternoon after sliding early on news of possible accounting irregularities at Computer Associates ( CA). Thousands of causes are being offered -- even the charts gave some hints, but they suggested the rally wouldn't be long-lasting. "I don't have a good catalyst for this action,
which is surprising a lot of people," said Bob Basel, director of listed trading at Salomon Smith Barney. Basel's honesty aside, myriad theories were proffered to presumably explain the advance. Among them were that stocks were inspired by Lucent's ( LU) reaffirmation of its guidance, or simply that investors desired relatively "simple" stories such as Merck ( MRK) and 3M ( MMM). And of course, some pointed to short-covering. There was talk Morgan Stanley was a big buyer of S&P futures, which may have been done to cover short positions for a client. Morgan's press office didn't return a call seeking comment (it'd be shocking if they would). Regardless, the generic "shorts-covering" was another reason cited by some observers for today's bounce. "A sharp move in such as short time is typical because shorts are being squeezed," said Steve Hochberg, co-editor of The Elliott Wave Financial Forecast. On days where there's no clear fundamental reason to explain the market's movements, technical analysis may offer some clues. At the S&P 500's intraday low of 1074.36 and the Nasdaq Composite's nadir of 1729.20, both indices were at levels not reached since intraday on Nov. 2., which proved to be an inflection point during the market's fourth-quarter rally. Today's Nasdaq low was a 50% retracement of its advance from its low on Sept. 21 to its Jan. 9 high, so there was "theoretical Fibonacci support," Hochberg said. But he argued there was no similar technical support for the S&P or the Dow Jones Industrial Average, causing him to conclude: "I don't think this is the start of anything big." Sustainable moves rarely start so abruptly, and while "running high," put/call ratios were not at "bear-busting levels to indicate a major low," the newsletter writer said, observing that the CBOE Volatility Index and McClellan oscillators also remain relatively low. "This was a short, sharp reaction against the trend," which likely will resolve itself shortly. On a day when there was little consensus about the underlying catalyst for the rally, market participants did agree it's nothing to get overly excited about. "I gotta believe it's up on air, and rallies at this point should probably be sold until proven differently," quipped one institutional trader. "Nothing's changed between today and yesterday. People are still concerned and cautious, and the level of confidence in the system has been damaged." The trader, who requested anonymity, argued that the "cleansing process" regarding accounting practices is "good for the long term," but short term the "psychology of the market is fragile." Today's rally may continue for a few sessions, but the market is likely to retest the September lows in the weeks ahead, he forecast. At 1.4 billion on the New York Stock Exchange and 1.9 billion in over-the-counter trading, volume was up noticeably today from recent action, which should encourage the optimists. But "volume is not at levels we need to see to convince long-term investors that things are all better yet," the trader said. Yes, doubt springs eternal on Wall Street these days, which isn't surprising given what's gone on in the past two years.