I would like to divulge my thoughts and my reasoning as to where I think the market is heading. 

Reasons for the Recent Rebound:

1. Credit Crunch isn't as bad as we thought - First and foremost, the credit "crisis" wasn't as bad as everyone thought it was, banks like Wells Fargo and US Bancorp are doing just fine. The market was pricing in a catastrophe, but it only got a small disaster.

2. Dropping Oil Prices- In June oil had reached close to $150 dollars a barrel and people were speculating that it would go up to about 170$ to 200$. Oil like anything else is subject to supply and demand. Americans respond to price increases just like the rest of the world. So with higher gas prices Americans are driving 40 billion miles less than they were before. In China, the government decided to rise prices to cover the rising cost of the commodity. And in the Middle East the oil giant announced they would increase output by about 10%. When the world's largest consumer of oil consumes less, the worlds largest and fastest growing country raises prices, and the worlds largest oil producer increases production...what happens? By the laws of supply and demand the price of oil will go down.

With that aside, lets look at where the market is going now.

Reasons why the market will continue to go down for the next 6-15 months:

1. Politics - Every presedential election the market always tends to go down. By the looks of it, we will probably have a democratic president. When a democratic president takes office their is always a bigger retraction in the stock market because of higher taxes.

2. Inflation - Dropping oil prices has given the market a gleam of hope and has triggered a rebound. The problem is we are still dependent on a resource that has a finite supply. From this it would be hard to imagine oil ever dropping below $100 barrel again. Everything that you buy in retail stores is effected by higher energy costs because of shipping. If retial absorbs the higher costs then their will be less profits, if they pass down the expense to consumers they will buy less.

3. Tighter Lending Policies - With the credit market tightening its standards and increasing captialization, it is much harder to get a loan. Loans are a big driver of growth for companies because it gives them the fiscal resources to expand their operations into new and existing markets. Although corporate lending is a much better business to be in than mortgages. The defaults from mortgages has affected the money supply for the other loans, such as for corporations.

These 3 factors, I think, will contribute to the continued retraction of the market over the next year or so. It is hard, if possible at all, to predict the exact bottom, but as corporations adjust their operations around the new obstacles that face the free market today, you will eventually see them rebound and rally in the near future (1-2 years from now).

Feedback is certianly welcome.