This advice applies if you just think that there's a few tickets on the clock before it hits midnight. Personally, I think that what we've seen recently has been a sucker's rally. However, even if I'm right, it doesn't mean that someone can't make good or even great money in the short-term taking the other side of my trades.
If you think that the jig isn't up, I suggest stocking up on small cap crap stocks. Craps stocks come hurtling out of their bottoms during rallies like this. Take a look at two homebuilders who many thought would go under, Beazer Homes (BZH) and Orleans Homebuilders (OHB). Both these stocks were and still are heavily shorted and deservedly so. Look at a YTD chart of these stocks compareing with the S & P 500 and the ETF based on the homebuilder's index. While the former have been flat, OHB is up about 300% and the BZH is up about 150%.
Be careful, after all, you're going to be looking for crappy stocks, so don't be surprised if awful little banks and biotechs with no drugs that burn through cash pop up on the screen. A stock like that I think fits this bill perfectly is McClatchy (MNI). It's trading around $2. McClatchy used to be one the premier newspaper chains in this country. You can probably fill in the rest of the story.
Anyway, it has a terrifying debt to equity ratio of 25 and lost 22 cents a share last quarter, yet it is up 193% in the last six months! This is an extremely volatile stock, but I think it's got the legs for another big move up.
Via Stocks for All Seasons:
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