Stocks have seen steady buying since the open, with the iShares Russell 2000 Index ETF (IWM) leading the charge, now up over 1% on the day. Beaten down, highly-shorted names continue to see strong buying, indicative of continued short covering. The S&P 500 Index (SPX) is currently above a key resistance area of 1,360, but is today's light volume move simply displaying a of lack of conviction?

One intermarket indicator that sticks out like a sore thumb today is the commodity/dollar complex. Metals, crude, and grains are all ripping higher, even with the dollar near breakeven on the day. Such moves in commodities are typically accompanied by sharp selloffs in the dollar, but that isn't the case.

Many traders are speculating that the price action is front-running a potential European Central Bank (ECB) rate cut due out on Thursday, or quantitative easing by China. Regardless of the reason, the price action is impressive.

Going into tomorrow's holiday, markets have a feeling of "meh." With short interest on all SPX stocks at recent highs, market participants continue to feel pain as the indexes grind higher. Should the economic data and decisions set to be released later this week lead to further economic stimulus, these shorts should continue to feel the pain.

After what seems like a lull to begin the week, Thursday and Friday should see some fireworks. Going forward, longs should key in on this SPX 1,360 level, and target a move up to 1,400. Those in the bearish camp would obviously like to see a break back below 1,360, with a targeted move down to the psychological 1,300 level -- now site of the 200-day moving average. The next two trading days should be very telling.