Buy the dips and sell the rallies. I’m positive you’ve heard that one before.

By selling into temporary rallies and buying into the subsequent pullbacks, you can lower your cost basis and build a platform for stronger growth when the market recovers. Tactical stock market trading doesn’t make nearly as much sense after a new bull market takes off. (The pullbacks then are generally minor, and hard to gauge in advance.) But it’s the right formula for now. Buy some, sell some.

The Stock Market Is Up From a Deep Dive

Obviously, the HUGE market swings of the past week make it difficult to judge whether we’ve seen the bottom. Last Thursday’s dramatic intraday turnaround on Wall Street—down sharply for the first half of the session, then up even more sharply in the second half—brought a welcome change from the pattern of the past few weeks.

Since the beginning of September, the stock market has repeatedly had difficulty holding on to gains achieved in early-morning trading. For a while, it looked as if this depressing tendency would repeat on Thursday. By intraday, the Standard & Poor’s 500 was scraping a new low for the year.

But then CNBC reported that the Treasury is working on a plan to restructure the financial system along the lines of the Resolution Trust Co., a tool used in the early 1990s to sort out the Savings and Loan mess. Stocks soared, led by the battered financials, even though the government hasn’t yet released any details of the plan. But beware—the 400-point bounce we saw in the Dow represents nothing more than hope and speculation.

So we probably haven’t seen the final low for the blue chip indexes. If nothing else, Thursday’s rally suggests we’re much closer to the end of this bear market than the gloom-and-doomers insist (See also: "How to Profit From the Market Meltdown"—a free online conference hosted by Richard Band. Click here for immediate access.)

With a bit of luck, stocks could be tracing out the early stages in a sustainable uptrend by the election, which is why now you should take advantage of these bargain prices. The best stock market tip I can give you is to do some serious buying!

But Bargain-Hunters Beware…

Just because the valuations on many stocks on Wall Street look like bargains, their best days are long gone. You need to be selective about the stocks you’re adding to your portfolio. The new market leaders that will rise from the rubble will be driven by financially solid dividend-paying companies in undervalued sectors and with no exposure to the credit crisis (see "Steelmakers Still a Steal").

If you want to protect yourself and profit from the changes we’ve witnessed in the market over the past several months, you must...