"Bonds are getting smacked again, so you have an asset allocation trade and a lot of it's been going on since that last move through 1,985 (on the S&P 500)," said one trader. Another pointed to the rebound in health-care stocks, up 1.7 percent, after they declined earlier in the week amid fears that Treasury was cracking down on mergers that enable U.S. companies to benefit from moving their headquarters to foreign addresses where they pay less taxes.
Read More5-year auction blamed on Fed uncertainty
Traders also cited short-overing for firing up the rally. "At the end of the day, it's just continued momentum. It's once every two weeks, we lose a percent or two in the market place and people get scared. The VIX moves 10 percent to 15 percent in a day and they get scared…Today, they're not scared," said one trader.
MacNeil Curry, global head of technical strategy at Bank of America Merrill Lynch, said the S&P's 50- day moving average was an important pivot point—at 1,976. The S&P touched 1,978 and reversed course, all the way to a high of 1,999 intraday.
Read MoreHere are buying opportunities in small caps: Pro
Curry said that level could come into play again as a testing point for the market. "I thought we'd get down to the 50-day moving average. If we broke there, we'd see a push to (S&P) 1,940. It did get down to the 50-day, but I don't think it's been busted yet," he said.
Curry said the selloff in the first two days of the week did not have the look of a bottom because of the slope of the equity volatility curve. "I'm inclined to say this is more of a temporary bounce and risks are more to the downside," he said.