There's several factors that are modestly helpful to stocks today: 1) oil up and stabilizing in the low $80's, 2) some relief that the terrible incident in Canada appears to be the work of alone wolf, and 3) China's manufacturing number slightly better than expected.
Read MoreLook what lower oil prices do to company profits
But these seem like modest contributions to the rally. Two additional factors seem more important:
1) Earnings. By the end of the day, almost 40 percent of the S&P 500 will have reported for this quarter, and the numbers have been good. S&P Capital IQ blended earnings are up 5.5 percent for the S&P; if recent trends hold we should end up roughly 9 percent.
Revenues are up 3.3 percent.
Today, strong reports from 3M (MMM), Caterpillar (CAT) and Union Pacific (UNP) are lifting the Industrials and Transports. A strong report from Diamond Offshore (DO) is lifting drillers. Excellent reports in the automotive space from Group 1 Automotive (GPI), Dana Holdings (DAN) and O'Reilly Automotive (ORLY) are lifting that sector.
Read MoreWatch Art Cashin: Econ data, earnings jolt stocks
One important point: the commentary on weakness in Europe has not been as dire as I thought it would be. S&P 500 companies get roughly 15 to 20 percent of revenues from Europe, so I was assuming that weakness there would be widely discussed. Europe is mentioned in about a quarter of the reports I have seen, but the concerns have been offset by comments about strength in the U.S. or even in China.
2) Hedge funds forced in. This is difficult to measure, but traders almost unanimously have said that hedge funds have been very active sellers during the panic sell-off two weeks ago, and in recent days have been active buyers.
Why? The underperformance of many long/short equity hedge funds has been well-documented. For whatever reason, many have been unsuccessful picking individual long and short stock names that outperform the broader market. We are now entering a seasonally strong period of the year, and with most funds underperforming they are being FORCED into the market.
Bottom line: good earnings, best economy in the world, and money is piling into the U.S. market. One manager told me that all his European clients, the only thing they want to do is buy stuff in the United States. Stocks. Farmland. Anything.