On Tuesday, traders found encouragement in the monthly Institute for Supply Management release, which surveys purchasing managers in the nation's manufacturing sector. The purchasers reported a slight uptick in manufacturing activity in June (to 50.2 on the ISM index), versus an expected decline. As in past months, exports provided a source of strength.

Construction activity for May -- a less important number, since it's released with a month's delay -- also proved a tad stronger than economists had forecast. Outside the battered housing sector, construction spending crept up 0.2% in May, after a 1.6% jump in April.

These morsels of favorable news, together with the market's pronounced tendency to rise on the first trading day of the month, pulled buyers off the sidelines Tuesday. With a little bit of bloomin' luck (in the form of a long overdue pullback in oil prices), stocks should be able to lift their head above water and take a good, deep breath over the next two or three weeks.

How to play it? Very cautiously. The housing and credit crunch has turned out to be more persistent, and more damaging, than I had imagined in my most pessimistic "what if" noodling a year or even six months ago. I'm rooting for a rally, but we need to see some real improvement in both relative and absolute performance of the financial shares if the broader equity market is to mount a sustainable advance.