Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of book retailer Barnes & Noble (NYSE: BKS) climbed 11% Tuesday after posting a narrower quarterly loss.

So what: The red ink continues to flow at Barnes & Noble, but strong sales of its Nook e-reader -- $277 million in the first quarter -- may be a sign that its digital focus is starting to pay off. The shares were crushed earlier this month after Liberty Media said it would invest $204 million in Barnes & Noble instead of buying it outright, so today's rally serves as a much-needed bounce for shareholders.

Now what: I'd continue to be cautious. Barnes & Noble still sees a full-year loss of $0.10 to $0.15 per share and doesn't expect to be profitable until roughly mid-2013. It's tough to get excited about its short-term potential. And while today's news is encouraging, betting on Barnes & Noble to beat out digital gorillas Amazon and Apple over the long run isn't exactly an enticing offer either.

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