Thinking back on my last missive, I realized that my return to the old, familiar bearish negativity was a sharp departure from my almost cavalier "ride the wave" attitude that I have promoted throughout the past bear rally. Given this break, I suspect a deep breath and a slow review is warranted...

1. The rally in place since the March lows is over and a correction has already begun.

2. This correction may be punctuated with one last rally attempt before a more serious correction in the Fall. Given the extent of the stimulus pumped into the economy, this correction should not be as deep as I had previously suspected, but it also means that the final deep correction of this bear market will still be ahead of us, NOT behind.

3. The recovery from the pop of the bubble is not over. This process will be very slow and drawn out. Until it is over, the market in my eyes is mired in a bear market or at best some kind of trading range.

4. Given that the economy looks like it can "hang in" there while this healing process plays out, there will always be opportunities under the covers of whatever is going on in the general market. Holding firm in a mutual fund or funds (or even some basket of stocks) over this time period will not be a very effective way to grow wealth over this time period.

5. Given the above, the best returns will be from trading around the cycles. That is, buying when panic and fear is rampant and selling into the rallies. If you want to buy and hold for the intermediate to long-term in a diversified portfolio, you will be OK, but you are likely to find that you have made very little progress after all is said and done. This means it will be hard for most people to make much money at all from this stock market no matter what strategy is used. Timing will be everything, but timing is so much harder than just holding.

To me, these points describe the fundamentals to the dynamics that are in place. As we suffer through this together, you will find me vacillate from hardcore bearish to conciliatory bearish. I will try to moderate my words when the passions start getting thick because I think most of you are not too concerned with the day-to-day madness of the markets and are not seeking to profit from them. So, you are little served by short-term thinking punctuated with the drama of the day or week.

Finally, in the spirit of tempering bearish growls with some kind words, today's strong retail numbers were very encouraging to me. It says that the consumer is STILL alive and willing to foot the bill to keep the economy afloat. It also lends weight to my thinking that the next correction or two should not be extremely deep. However, businesses have yet to really step up to the plate. And at some point, consumers will have to pay those bills and businesses will have to do something besides cut costs. If businesses are still not hiring and investing and raising wages when consumers are forced to pay the piper, we will be in for serious trouble. So far, it seems we have been able to dodge this bullet over and over again. As always though, be wary!