What Recession? Investors Go Shopping for Bargains

Likewise, Tiffany , Carnival cruise line and Toyota got a thumbs-up from Charles Bobrinskoy, vice chairman and director of research at Ariel Capital Management, who recommends those stocks while expressing the opposite view for commodities and Treasurys.

"Treasury notes are dramatically overpriced here, so we would advise people to be getting aggressive on consumer stocks, maybe some higher-quality financials, but avoiding anything with a commodities feel to it," Bobrinskoy says.

For those holding the view that the market is still laced with peril, the continuing bad economic reports, like the jobs numbers, and the dark clouds hanging over financials continue to raise concern.

"Some of the leading-edge economic numbers are showing we haven't made a turn," says Mike Larson, an analyst at Weiss Research. "We still need some technical validation, in my opinion, that this is more than an oversold rally."

For Larson, a decrease in Treasury prices and an increase in yields, which move in opposite directions, would increase his confidence. He believes the market has yet to "prove itself" and will face its next significant test when the rebate checks for the congressional stimulus package come out. How well the economy holds up after those rebates are spent will be a key sign, he says.

After that, it will be up to financials to serve as the final piece of the puzzle, a sentiment broadly shared  in the market.

"People are beginning to think, gee, maybe the worst of it on the financial side is over, and the bargain hunters are going to restore some order and get some bids coming back into the market," says Art Cashin, director of floor operations at UBS. "We'll get to see how this recession evolves. If it's conventional wisdom, it will be short and shallow. If it begins to look like anything over than that people will reconstruct their views and we could have another test of the January lows."

In the meantime, Kresh and others are continuing to buy into the recession.

"We expect to reduce our cash positions by 50 percent over the next probably 30 to 45 days. I'm in the buying mode," he says. "I see that we have very probably gotten to the point where there are more bargains out there than bad opportunities."

© 2008 CNBC.com

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