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"People have to make room, in lieu of no new cash coming in," Kruszenski said. Also, he added, traders were "selling into strength."
Last week the major indexes each lost more than 2 percent as news about the possibility of rising interest rates in China, coupled with troubles in periphery European countries and lack of progress at the G-20 meeting of world leaders gave investors reason to sell stocks that had appreciated 15 percent or more since July.
With some of the steam taken out of the market before trading Monday, traders were able to reassess and look at fundamentals, and Caterpillar's news that it was buying mining equipment maker Bucyrus in an $8.6 billion deal was at first, just the thing.
"Caterpillar is a cyclical company," said Kruszenski. "The fact somebody is buying something right now, suggests the trend may have some further legs."
Art Hogan, chief market analyst at Jefferies & Co., said the news helped to lift the market on Monday: "That’s exciting to the market, it adds some buzz," he said.
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