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That the market would eventually pull back after rallying 40% off the lows was the easy trade. However, in the coming weeks investors will need to decide if this is indeed the start of a new bull market or a bear market rally.

I am in no rush to make a decision as I believe that even if this is a new bull market that this correction has further to go. After a two month 40% run, I would expect a correction that lasts at least a few weeks.

In the past two weeks we have seen companies issuing shares at a record pace. The flood of equity issuance is set to continue in the coming weeks, albeit at a slower pace. This supply should keep a lid on the market. Given that I believe that the upside is limited in the short term, there is little harm in waiting a few weeks to see where this correction will take us.

While a bull market from these levels would not likely go very far, I don't want to rule it out. The Obama stimulus should start hitting the economy this summer, while the Federal Reserve is printing money. There is no precedent for such action. At the same time I don't want to rule out revisiting the lows. For now, I am biding my time and keeping an open mind.

Disclosure: Short SPY.

Source: Bear Market Rally, or New Bull Market?