On Monday the Dow Jones Industrial Average dropped more than 200 points before closing a little better. No real reason for it. Pundits suggested the drop in commodity prices (oil and gold were down a little, not enough to comment on) were the reason for the dip, suggesting the economy may not be as robust nor inflation as big a problem as thought on the Friday before.

But here's the real scoop: the market has rallied well beyond a level where economic numbers justify.

The stock market, as measured by the Dow Jones Industrial Average, sharply rebounded from its low of 6440 in March of this year. Currently, as this is written, the notable index is hovering around 8400. That's an increase of 30%. Not bad for two months of trading. While the average is made up of only 30 stocks, those 30 stocks are some of the best. There are also some real losers, such as General Motors (NYSE: GM) and Citigroup (NYSE: C). But for the most part, the index contains the strongest industries with some of the strongest stocks. With that kind of recovery already in place, is it too late to buy stocks or is this just the start of a major rally?

Most CEOs expect things to get worse. Chief Executive Officers of major U.S. corporations were more pessimistic than three months ago about their business and the economy over the next six months, the Business Roundtable reported last Tuesday. The CEO confidence index fell to negative 5.0 in the first quarter from 16.8 in the fourth quarter. It was at 79.5 a year ago. The CEOs expect the economy to contract 1.9% in 2009. Over the next six months, about two-thirds of CEOs expect lower sales, lower capital spending and fewer jobs at their company. About a quarter expect sales to rise in the next six months, while less than 10% expect to increase hiring or capital spending.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Lately I've looked in vain for good news. I mean news that has some substance, that would make a real difference to an investor. I can't find any. In fact, I feel like a pinball, bouncing from one rubber post to another, each one accelerating the downward, inevitable path toward the black hole at the bottom of the board.

Is this science or science fiction? That thought came to mind when I read that traders who were exposed to more testosterone in the womb made six times more money than their low-testosterone-level peers on very volatile trading days. So if you want to breed a trader, expose him to lots of testosterone in the womb. How do you do that? Beats me.

To determine the traders' prenatal testosterone exposure, University of Minnesota researchers measured their "2D:4D ratio" which is the relative lengths of the index and ring fingers on the right hand. Those exposed to higher levels of testosterone in the womb tend to have relatively longer ring fingers.

Based on the 2D:4D measure, researchers who studied the traders' profits over a 20-month period between 2004 and 2007, found that those with the highest in-womb testosterone exposure in the womb earned six times more than those exposed to the least. They also tended to have the longest careers, surviving about three years longer on average.

Last year global stock markets lost $29 trillion in value -- falling 42%. And although it does not get much media attention, there is something that investors can do when the stock market moves against them. They can set stop losses on their stocks which limit how much money they can lose. Specifically, if an investor buys a stock at, say, $20 a share, he or she can issue a limit order which requires the broker to sell the stock when it declines to a lower price, say, $18. Such a limit order would limit the investor's loss to 10%.

This comes to mind in considering why the average stock in my investment newsletter gained 15% in 2008 when the S&P 500 fell 38.5%. My monthly newsletter analyzes broad economic trends and bores into specific industries. It also picks three stocks each month for subscribers to consider. During the first half of 2008, the energy and commodities stocks mentioned boosted its performance to +29% through the end of June. Then the bottom began to fall out as commodity prices tumbled and the financial services industry collapsed.

Thanks to the 2% stop loss rule -- which automatically sells any stock that falls 2% below the price at which it was mentioned in the newsletter -- the low point for the year was -1% at the end of October. By the end of 2008, only four of the 36 stocks mentioned remained in the portfolio. However, thanks to a surprising boost in one stock mentioned at the end of October and the three stocks picked at the end of November, the average stock was up 15% by the end of 2008. What were the three best performers?

Meanwhile, falling oil prices are pushing down stocks in Europe even though the U.K. economy posted its worst third quarter since 1990. Markets in Asia fell amid investors' concerns about interest rate cuts in China and Toyota Motor Corp.'s (NYSE: TM) first quarterly loss in 70 years. Bloomberg News is reporting that Toyota is considering cutting its North American payroll.c

In the U.S., all eyes will be on the housing market. Investors will be looking for some reason to be optimistic. That may be tough. According to the Wall Street Journal, record-low interest rates is spurring a wave of refinancing and not home purchases. Home resales appeared to stabilize in the fall but that was because of record levels of foreclosures.

"Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that, even with such a low rate, only about 67% of U.S. households can afford a house," the paper said. "Home ownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes."

Santa's nice list may be small this year.

This post was written by Minyanville contributor Vitaliy Katsenelson.

"You should buy Freeport McMoRan (NYSE: FCX), Caterpillar (NYSE: CAT), PACCAR (NASDAQ: PCAR)." That is what I hear from friends of mine, who are in the biz, all the time. They tell me how cheap these stocks are -- three, six, eight times earnings. "You are a value guy! How come you are not loading up on them?" they ask.

Let me tell you when I'll buy "stuff" stocks (if I ever do, because I've never really cared for the cyclicality of that business). It's when everyone stops telling me how cheap they are and that they are "buys."

These stocks are very similar to housing stocks two years ago: housing stocks were down 50% and looked cheap. Value managers bought just to see their stocks get cut in half again and again.

One needs to subnormalize earnings in this environment for all stocks, but stuff stocks need to see their earnings to be "sub-sub-sub-sub normalized." I've said it before, but it is worth repeating: the global economy just started its journey into a recession, and demand for stuff will drop off the cliff most likely to a lot greater degree than anyone imagines.

The current financial crisis differs from the Great Depression in many respects. At the moment, the most significant difference is that central banks around the world are moving fast to try to stop the problem from getting worse. Stocks in Asia and Europe are rallying and futures point to a higher opening in the U.S.

Should you sell into this rally? Maybe. It depends on whether you think the world's finance ministers have solved the problem.

What are European central banks doing? The UK is injecting $64 billion into three large banks -- Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group -- European governments agreed to guarantee new bank debt until the end of 2009, and the U.S. is coordinating with Europe to offer unlimited dollars to ease the credit crunch.

How are markets reacting? In Asia, stocks rose -- Hong Kong's Hang Seng index surged 7.5% while Sydney's S&P/ASX 200 index rose 5.6%. Things are looking up in Europe as well -- London's FTSE 100 index and Paris's CAC-40 are both up 5.4% and S&P 500 futures suggest a 6% gain in the U.S. What will the U.S. do?