Tech's bounce back and growth rally could be market drivers Tuesday

Traders on Tuesday will be watching to see if technology is really back on its feet, after a rebound Monday that helped send the S&P 500 to new highs.

Facebook, Amazon, Netflix and Google parent Alphabet, aka FANG, and other big tech stocks rallied Monday, led by Apple's 2.9 percent gain. Nasdaq and the S&P technology sector had their best day of the year Monday, with Nasdaq up 1.4 percent to 6,239. That was its biggest gain since Nov. 7, when it rose 2.4 percent.

Traders have been wondering if the sell-off in tech is over.

"Usually when you get these big sell-offs without any sort of fundamental catalyst, they seem to self-correct and not last long, unless you have a real catalyst that comes along," said Dan Suzuki, equity strategist at Bank of America Merrill Lynch. "It seems pretty typical."

He added: "I think the narrative has shifted back. Everybody was afraid of these tech stocks taking over the world, and the positioning was a bit crowded. It probably shook some of that out. The optimism is still really high around these stocks and their fundamentals are good."

Suzuki said the disruptive aspect of the Amazon deal is probably a catalyst for buying in other names in the sector, as the new era of tech shakes up established businesses.

Even with the comeback in tech, Suzuki said the market is not out of the woods, and he still expects the market to have a summer swoon, correcting five to 10 percent at some point.

"I think the market is more vulnerable," he said. "In the very near term, I'm sure the technicals look pretty good. I think the risks have gone up. Growth indicators have started to roll over." He expects the market to correct, make a comeback and the S&P 500 t o finish the year at around current levels.

Scott Redler, partner with T3Live.com, said the test for the S&P 500 will be to see if it can head towards 2475. The S&P 500 closed at a new high of 2453 Monday. Besides the rally in tech, biotech also gained. The iShares Nasdaq Biotechnology ETF IBB jumped 2.4 percent to 299.79. The small cap Russell 2000 , which had been lagging, gained 0.8 percent to 1,418.

"It seems the bios have some momentum, the banks are in the game, technology is pushing the bears back, and the S&P is at an all-time high," Redler said. "But the bears will say the volume has been light, but the volume has been light since 2012."

Suzuki said one factor that helped turn tech sentiment for the sector was Amazon's $13.7 billion bid for Whole Foods , announced Friday. Amazon was up 0.8 percent Monday after the group steadied Friday. Coincidentally, technology CEOs were meeting with the president at the White House on Monday afternoon.

The selling in tech had been broad-based by all types of investors, and it appears the sector became oversold, Suzuki said. On the other hand, it was a group that was highly valued and a big driver of the stock market's gains this year. Fund managers were 70 percent overweight in the FANG stocks in the first quarter, he said.

Current account data are expected at 8:30 a.m. ET Tuesday. Boston Fed President Eric Rosengren speaks at 8:15 a.m. at the DNB-Riksbank Macroprudential Conference Series meeting in Amsterdam. Dallas Fed President Robert Kaplan will also speak in San Francisco at the Commonwealth Club of California.

There are a few earnings, including Lennar, Adobe Systems, FedEx and La-Z-Boy.