Is today's rally for real?

It feels great to watch stocks rise so much today. After all, the Dow fell 230 points yesterday. I don't have any idea why stocks are moving up and down so much. But it makes me think that the safest bet for short-term traders would be a bet on high volatility.

Meanwhile, I cannot explain why stocks are up 330 points today. Some think it is the $5 a barrel decline in the price of oil. Others think it may be an economic slow down in Europe coupled with its failure to raise interest rates. If Europe's slowdown is starting now and ours has been going on for a year, then perhaps the U.S. is a safer place to invest now because we're a year closer to recovery.

This could make some sense in explaining the strengthening of the dollar relative to the Euro and the Pound. But there is also the plunging of commodity prices more generally. As I posted earlier, this could have to do with a crackdown on speculators and the collapse of SemGroup, a big energy trader. As money goes out of commodities it seems to be heading towards software, housing, airline and even some financial stocks.

In a nutshell, if you believe that the commodity bubble is continuing to burst, it makes sense to invest in all the stocks that have been beaten down in the last year. That is, unless a hurricane shuts down drilling in the Gulf of Mexico.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.