Is This the Turning Point or Another Bear Market Rally?

Yesterday, the Dow crossed back over 7000 for the first time in a couple of weeks. Today, it crossed 7200. The question still hovers around us. Is this rally for real, or is it just another bear market rally? Stocks logged the highest gaining week since November. But what does this all mean? Will this rally continue? Is this the bottom? Is it time to make lots of cash money?

The turning point for stocks lies with the news of the economy and the financial markets. Look at the news that have given us four straight days of gains: Citi making money so far in the year, consumer confidence up, retail sales stabilizing. It takes lots of time for a bottom to settle. You don't just get several good days in the market and declare a bull. Yet, news like this will keep the markets in check for a while.

I don't want to be too quick to declare this a turning point or another short squeeze. Positive signs from banks, consumers, and reinstalling the uptick rule will defninitely help the market. However, there are still questions about credit, mortgages, and toxic assets. Until these questions get answered, I don't think we will see a true rally. Remember all those rallies and 'turning points' back in 2008? At the time they had some good news, but the good news only lasted a week at a time. Before putting your money back in, see what the news brings next week. We still have earnings season from the first quarter in several weeks. Don't just declare a turning point and put your money in. Wait for the biggest questions to be answered. See if the good news of yesterday prevails tomorrow. Until then, be cautious and question everything. The stock market tends to recover before the economy. Don't be a bear for too long, but don't turn bullish prematurely. There is always cash money to be made. You just have to be patient and choose what you think is right, not what everyone else thinks is right.