Larry McMillan, options expert and editor of The Daily Strategist, offers a technical out look on the market's "oversold rally" as well as a new trading long position in Ryland Group (NYSE: RYL).

"The massive oversold condition finally asserted itself and buyers gained confidence. The appears to be completely due to the massive oversold condition that existed. Does this mean 'the' bottom is in? I don't think so, but it certainly means 'a' bottom is in – and should last for a while.

"Volatility indices ($VIX and $VXO) rallied during the latest selling, and as the rally unfolded, both of these indices fell, confirming the buy signals they registered yesterday. Moreover, the $VIX futures continue to trade at a heavy discount, which is another bullish factor.

"The confluence of buy signals from the oversold condition should be able to keep this rally going for at least a few
weeks. However, the larger picture is not so positive. There was major damage done, and most stocks are
going to need time to build bases.

"Moreover, we think a retest of the lows, at roughly 1270 on the S&P 500, or at least the closing low of 1320 will be necessary to determine if this bear phase is over or just taking a rest. The market can be enticing when it rallies.

"The rally last September off the August bottoms, and then the 1000-point Dow rally (I like to call it a sucker rally) after Thanksgiving, both pulled a lot of money into the market, only to destroy it in the recent collapse. There is no reason to assume that the market couldn't be laying yet another trap for the bulls.

"As to specific sectors, the entire home-builder group was strong on Wednesday, and RYL was one of the leaders. The stock has been building a base for four months now, and finally has broken out to the upside. Stock volume patterns are strong and improving.

"The close above 29 was very positive. There is support at 27-29. The calls are very expensive on RYL, so we are buying short-term in-the-money calls to limit time value premium expense. The mental closing stop is 28."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.