You already know about the huge opportunities in the stock market right now. If you had the courage to invest near the lows, you took advantage of the big run-up we've seen over the past couple of weeks.

And even if you didn't buy any new shares, just holding on to your existing positions -- rather than selling into the panic and guaranteeing yourself a big loss -- marks a major victory. Congratulations!

The next step
Yet, as some start to hear the all-clear signal, others will talk about the way bear markets work. Specifically, despite gaining nearly 1,500 Dow points from the October closing lows, the stock market isn't close to convincing many technical traders that the bear market is over. Take a look, for example, at how far below 200-day moving averages many stocks are -- even after the rebound.

Stock

% Rebound From 10/27 Dow Lows

% Below 200-Day Moving Average

Accenture (NYSE:ACN)

20%

(9.6%)

Teva Pharmaceutical (NASDAQ:TEVA)

13.4%

(5.5%)

Weatherford International (NYSE:WFT)

47.6%

(50.9%)

Infosys (NASDAQ:INFY)

22.7%

(22.1%)

ConocoPhillips (NYSE:COP)

23.4%

(28.5%)

Transocean (NYSE:RIG)

32.2%

(35.5%)

3M (NYSE:MMM)

8.7%

(9.7%)

Sources: Yahoo! Finance, Stockcharts.com.

As you can see, many of these stocks would have to rise a lot further just to get back to their moving averages -- let alone hit new highs. The Dow would have to claw back to between 11,500 and 12,000 -- another 20%-25% higher than where we are today -- before these traders would see confirmation that the markets had broken their long-term downward trend from last year's highs.

Keep your cool
But just as we told you to stay calm when these same folks were making such dire predictions, you'll also need to keep your wits about you if the market has a melt-up for a while. Here's some specific advice on how to prepare for an even bigger comeback for stocks:

  • Don't get caught up in the greed. You've heard a lot about how smart investors get greedy when the rest of the world is paralyzed by fear. However, if the Dow rebounds to 12,000, there'll be a whole lot of greed among mainstream investors -- and you'll want to start looking for reasons to be fearful.
  • Get your risk tolerance fixed. When stocks have already crashed, selling stocks to cut your risk carries a hefty price: You have to take huge losses. After the rebound, however, you'll be able to fetch a much higher price for many of your formerly crushed stocks. Prepare now to know what you'll do when the time comes, and you may never have to go through the same uncertainty you did during this panic.
  • How much is enough? Many folks who were close to retiring before the market dropped found that they had invested aggressively in the hopes of having an even nicer standard of living during retirement. Now, they've had to scurry to adjust their plans -- and many will have to work longer than they'd originally intended. If a rebound to Dow 12,000 gives you enough of a nest egg to support your basic needs along with a few perks here and there, think about taking your risk level down a notch to ensure you won't have any back-to-work surprises during your retirement. Even if that means one or two fewer dinners out or trips to the golf course, the peace of mind is well worth the small cost.

A look back
Plenty of over-optimistic investors have gotten trapped by bounces during past bear markets. Unlike the 1987 crash, in which the markets staged an orderly advance back to new highs within a couple of years, most bear markets involve fits and starts of up and down movements that mask the overall direction of the market.

For instance, during 2000 and 2001, there were several significant rebounds that proved to be only temporary in nature. Things were even more volatile during the 1970s, when during the recovery from the lows of 1974 and 1975, the market grew increasingly choppy in its movements -- until it finally broke out to new highs in the early 1980s.

To get through the panic, the best course of action for many investors was to stay put. Once the Dow recovers to 12,000, however, all options will be back on the table -- including the choice to get out of stocks without selling at a fire-sale bottom. Take a look at your portfolio now and be ready to act when the time comes.

To learn more about investing in interesting times, read about:

For more than 15 years, Motley Fool co-founders David and Tom Gardner have helped people learn to invest better. Now, their Motley Fool Stock Advisor newsletter is digging through the rubble to find the best stocks for a recovering market. See what they've found free with a 30-day trial.

Fool contributor Dan Caplinger thinks it'll be a while before we reach Dow 12,000 again. He doesn't own shares of the companies mentioned in this article. 3M and Accenture are Motley Fool Inside Value selections. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy works no matter where the Dow goes.