BEHIND THE MONEY: 'Bear' Bounce Could Go as Far as Dow 8,000; Trade Accordingly

Many traders (and viewers) still have their doubts about whether this is "the" bottom, but that is not stopping them from placing strategic bets to benefit from this bear-market bounce. In his note this morning, Dennis Gartman targets the 7,800 to 8,000 range as a potential high for the Dow average.

"There really is a large sum of money left upon the sidelines and there are huge short positions that must be unwound," wrote Dennis, in the widely followed Gartman Letter. Following a move to this targeted range, "the shorts will have been driven in; new longs will have become exited and will have put their money at work, and the stage will be set for another round of weakness."

As mentioned in yesterday's post, a rally of that magnitude would still not match the 'bull market' (What? You didn't notice?) that took place from November to January where the S&P 500 gained 24 percent.

So for short-term players, what are the best ways to trade this bounce? Jeff DeGraaf, head of technical analysis research at ISI and the No. 1 such analyst on the street, is a buyer of Sprint and Morgan Stanley . Morgan Stanley got an upgrade this morning from Goldman Sachs .

Joe Terranova, FM Trader and chief alternatives strategist at Virtus Investment Partners, is buying oil names such as ExxonMobil and ConocoPhillips , which have led past rallies in this bear market.

We'll be on the 'bear bounce' case again tonight. Many of the traders may not believe this is the beginning of the end of the credit crisis, but that ideology is not going to stop them from riding the momentum in some of these names to help their book this year.

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