Three weeks ago, I stated that the markets were oversold and due for a bounce. Obviously, my call was too early, but it does show this week's rebound was expected.

After all, stocks never move in a straight direction, regardless if it's a bear market or a bull market.

At the same time, Treasuries are having a good week. An auction of 30-year bonds went extremely well yesterday. Auctions of short-term notes earlier this week were also successful.

Even gold has started to come back over the past few days.

So all is right with the world, right?

Unfortunately not.

Believe me, I really want to proclaim that a bottom has been set, but it hasn't. This week's upward move by stocks is nothing more than a bear market rally. Bear market rallies can be spectacular, but like a snow-covered mountain, they are also very dangerous.

Just look at the economic backdrop. EU officials are scoffing at more stimulus. (Given their Don Quixote fight against inflation, is anybody really surprised?) Foreclosures rose last month. More Americans continue to lose their jobs. The stimulus package has yet to flow to our wallets.

Then there is the banking and automotive crisis. Does anybody really believe the banks are operating at a profit? This only makes sense if you exclude toxic debt and consider the banks are lending money that was practically given to them for free. U.S. automakers remain on the brink of destruction and a $40,000 Volt probably isn't the car cash-strapped consumers are looking for.

Finally, earnings estimates are being cut across the board with negative revisions far outnumbering positive revisions. I'm continuing to see full-year forecasts for the S&P 500 drop.

Given all this, I believe we will see new lows after this rally ends. How low? I'm sticking to my 6,300 target for the Dow Jones Industrial Average ($DJI), but in a video recorded last October, I gave a range of 5,600-6,300.

The one positive is that I do think we are moving towards a bottom.