I'm sure there were plenty of short sellers getting out of the way of that bullish tape. Naturally, this would be one of the aspects of the homebuilder-trade thesis: buy on the speculation that short covering would propel the shares higher.

I realize that, at some point, investors have to stop being negative on certain stocks and must consider buying before the recovery really sets in. Having said that, I am still cautious on homebuilders, and I am certainly no buyer, even after this pop on the earnings news. Sure, if you look through Lennar's report, you'll pick out some positives: a recent uptick in new-home sales, the possibility of pent-up demand, the observation that the 76 cents per share lost this past quarter wasn't any worse than the 76 cents lost in last year's similar quarter, etc. Come on, though, there are still plenty of negatives to keep a portfolio on the sidelines. The earnings release even mentions the worst one: the uncertainty when it comes to employment trends.

And here's something else. Going back to the earnings preview, concerns over the true worth of Lennar's backlog may come into question if the company sees cancellations. Investors thinking about buying Lennar should pay attention to this issue.

I'm going to avoid Lennar for now. The homebuilding sector is not free of the nasty recession just yet. I'll keep an eye on it, because it was a good trade today. Tomorrow may bring a new perspective, though, since the economy remains rough.

Disclosure: I don't own any company mentioned; positions can change without notice.