It was bound to happen. In fact, each bearish day that passed made it more and more bound to happen. Of course, what I’m talking about is today’s (so far) +2.0% rally. It’s a nice relief, but don’t forget the S&P 500 fell by 20% in less than a month to get to new multi-year lows by the end of yesterday. So, let’s not pop open the champagne bottles just yet.

And what should prompt a celebration? Considering 12 of the last 16 trading days were losers (big losers in a few cases), I’ll suggest that 12 of the next 15 days need to be winners to be excited. Easier said than done. Also, those gains - if we’re lucky enough to see them - really should be made with some substantial volume… more volume than we saw on the selling side of the fence over the past three weeks. If we can do that, and if we can legitimately threaten to surpass recent peak levels, then I’ll get excited.

Until then, I’m riding the bullish wave that stems from being oversold. I’m not calling it a bottom yet, however.

OK, with that business out of the way….

In Tuesday’s newsletter I made five harsh points about bear markets. The only ones I want to reprise right now are numbers 3 and 4….. the one that told us 3 out of 4 stocks moves the same direction as the market, and the one that suggested nobody really knows when the bottom is made until well after the fact (and yes, though it’s hard to believe, that even includes me).

Think about those two things for a minute. They aren’t contradictory…. not at all. But, the combination of the two sure can make it tough to get into and stay in long positions no matter how well you pick ‘em. In other words, you want to stay invested as much as possible because you don’t know when the market will surge higher. However, if you’re fully invested like you’re in a bull market but you’re actually still in a bear market, you’re fighting the trend (and probably losing money).

I say that to somewhat explain why we’ve been holding on to some of our picks rather than officially cutting bait on some of them. I’m fully aware that Xoma (XOM), Molina (MOH), Agilent (A), Edwards Lifesciences (EW) and a few others have been lackluster of late. The thing is, that’s more attributable to the market than to those stocks - a major distinction.

Were it mid-2008 and stocks were still frothy, I may not be as bold. In fact, I probably would have bailed on all of them. However, it’s not mid-2008. It’s early 2009, and stocks are basically priced at half what they were worth in mid-2008. And, dynamics, sentiment, and even the economy are all looking like there’s more upside than downside from here. So, from a risk/reward perspective, sticking with trades and taking a few lumps is the better choice - because you sure don’t want to miss the early part of the rebound (where the bulk of the gains are).

I don’t know if today is the pivot point for the market or not. It might be, but like I said, nobody really knows. If it is though, I think you’ll be glad you’re in the stocks you’re in, even if we were a few days early.

And by the way, almost all those trades that are still ‘on’ are also up big-time today. Many of them have made solid reversal patterns too.

Let’s be patient here, and see if we can’t at least recoup the ground we lost on some of those stocks. If they stall again at or near break-even levels, we can get out then and it won’t hurt as much. And who knows? Maybe this - yesterday and today - really is the bottom, and we can keep on riding their rallies.

Is your broker, adviser, or the media off the mark when it comes to helping you steer your portfolio through the economic minefield? Don’t fly blind any longer! Sign up for our free newsletter and you’ll start to receive money-making and money-saving ideas 2 to 3 times a week.