Stocks put on a third good bounce in a row today. Hey, I'm not the kind of guy to whine about a 213-point jump in the Dow! But the question is: What do you do with days like this?

I spent most of the session on the sell side, lightening up on stocks and funds that have exhausted most of their near-term potential.

I advise you to do some trimming yourself before market's latest burst of strength fades. From a technical standpoint, today's session continued the "nice, but" pattern we've seen so many times over the past six weeks. Upside volume came in a bit stronger than yesterday, but again lacked the explosive punch that could kill the bear, once and for all.

So it's on to September. Odds are, after some seasonal strength around the turn of the month, the market will head back down to probe its July lows in the 1200 to 1215 zone, basis the S&P 500 index. I'll keep you posted as the events unfold...

Enjoy the long weekend!

The clock is running out on the stock market's rally off the July lows. If you're sitting on stocks or funds that have given you trouble, now is the time to take your lumps and move on.

Sounds pretty dire, doesn't it? Not really. I've suggested to my subscribers for the past couple of weeks that the market will probably need to drop back to the vicinity of its July lows (1214 on the Standard & Poor's 500, closing basis) before we can get a durable recovery.

If we're lucky, the blue chip indexes won't undercut their July lows by more than a couple of percentage points. Then we can enjoy a solid fourth-quarter rebound that might well carry into the opening months of the New Year -- assuming Barack Obama continues to backpedal on his proposed tax hikes (or John McCain wins the election!).

But we mustn't run ahead of ourselves. Before a new bull market can begin, we have to get rid of the old bear. And technically, it will be almost impossible to kill the bear without at least one last stab at the lows by the major stock indexes.

By dumping some of your troubled equities now, you'll build a cash hoard to go shopping with a few weeks from now -- at lower prices. This is simply good money management: Buy the dips, sell the rallies.

What should you sell? A useful rule of thumb may be to look at the stock's July 23 and July 30 peaks. If the share price hasn't exceeded both of those peaks during August, it's a sign that buy-side interest is waning. Exit now and live to fight another day!

Are you pulling your hair out yet? If you aren't, you're lucky -- you haven't been paying attention to Wall Street. Before today's upside explosion, stocks skidded three days in a row, including some pretty nasty selling in the broader market (e.g., small caps) Monday. So will the real trend please stand up?

In due time, it undoubtedly will. For now, though, the only clear fact is that investors still haven't figured out whether we've seen the final lows for the bear market that began -- in earnest, anyway -- last October. The extreme volatility of the past few weeks is a sign of ignorance, not conviction.

Like most other market players, I welcome the drop in energy prices since mid-July, and the simultaneous rebound in financial stocks. I hope the pattern will continue.

However, I also recognize that if too many investors are wishing for the same thing, it's unlikely to happen -- at least not in the time frame most folks are expecting.

It troubles me, for example, that options traders rushed to buy calls as soon as the stock market indexes bounced off their July lows. Yesterday's session brought the heaviest call buying of 2008 on the Chicago Board Options Exchange.

To me, that smacks of "jumping the gun." The same eagerness to put the Big Bad Bear out of mind is very much evident on financial TV (for those hardy masochists who still tune in).

As I've told my Profitable Investing subscribers, I'm willing to turn out-and-out bullish if the market gives us even a few unmistakable signs of strength. A 9:1 upside volume day would certainly help.

To date, however, proof of a real turnaround has been lacking. So we must proceed cautiously on the assumption that a final market bottom is still waiting somewhere off in the distance -- perhaps later this month, perhaps in September or October.

The best buy right now is a "green" utility I've recommended to my subscribers. The company reported solid earnings last week, but the stock has dropped because the Street shortsightedly reasons that lower oil and gas prices will lessen the need for alternative energy sources.

Don't believe it. Fossil-fuel prices will snap back sooner or later, and when they do, investors will again clamor to own a piece this utility's business. The stock is a bargain in the alternative-energy space.

Leave it to Mr. Market -- the guy who just can't stay on track for more than a day. Monday, he knocked 240 points off the Dow. Yesterday, he decided to pile on 266.

Let's take a dispassionate look at the numbers:

Yes, we had a strong session yesterday. In fact, we got the best day for upside volume since the latest rally began July 16. On the NYSE, the number of shares traded in advancing stocks amounted to nearly 83% of the total shares traded in advancing or declining stocks. Then again today the market sent us on a small roller coaster ride to a current 104 on the Dow with just a half an hour left before market close.

Still, that's not the overwhelming vote of confidence it may seem. In the first two weeks after the market's bottom in August 2007, for example, we had two sessions in which upside volume hit 90% of the total.

Around the November 2007 low, we also got two 90% upside days, one just before the bottom and one after.

After the January 2008 low, Mr. Market never gave us a 90% day, but we had three sessions in the first two weeks with stronger upside volume than yesterday's high.

Then, within two weeks of the March 2008 low, we again saw two 90% up days.

In short, the market is tipping its hand, ever so subtly. Could the advance continue a while longer? Sure it could. Chances are, though, the blue chip indexes will slip back a few weeks from now to "test" their July lows (around 1200 on the Standard & Poor's 500 index).