Don’t be fooled by one good week

A couple of really good days in the market this past week brought more speculation that we were finally at the bottom.

Don’t buy it. At least not yet.

True, the Dow did close up nearly 600 points on the week — a 9 percent gain.

But we’ve seen this kind of action before, only to have it followed by the opposite action.

“This is probably a bear-market rally, but we’ll accept it for what it is,” Steven Roge, a portfolio manager with R.W. Roge & Co., told the Wall Street Journal.

Roge said he expects the S&P 500, now at the 750 level, to fall to about 600.

Of course, one never knows what fuels such predictions. Could it be Roge has short positions he wants to continue to take advantage of in a downward moving market? Is he just guessing?

It’s hard to know.

But he’s not alone in his opinion that a couple of decent up days do not necessarily translate to the bottom being reached.

However, it’s probably not a bad time to start eying some stocks that show promise upon recovery.

James B. Stewart, who writes a similar column to this (although for a much bigger paper, The Wall Street Journal), has started accumulating some stocks recently and has, in fact, been nibbling at stocks during much of the downturn that began in December of 2007.

Some of the stocks Stewart likes at their current levels are General Electric (GE), Quality Systems (QSII), a health care stock and retailer Buckle (BKE).

Stewart also bought General Mills (GIS) and Amazon (AMZN).

Summing up his convictions, Stewart wrote: “The market experienced a rare rally Tuesday, which naturally comes as a relief. But even before this, I felt good about buying these stocks. After years of practice, maybe I’m getting my emotions into line with my rational conviction.

“Which is, to echo the president, that this is a great opportunity to buy, no matter where the market goes in the next weeks or months.”

That got me thinking.

Maybe it’s time to quit sitting out after all.

Nah. I think I’ll stay where I am.

I need some more convincing.

But I do hope that maybe last week did bring about a turning point and we can get back to the business of making money again.

Brian