OK, so I was a day or two early with my short-term bottom and violent rally call, but it's party time on Wall Street today with the markets almost up double digit percentages. (Uh, now more than double digits ...)

So where do we go from here? Well, my prediction that we could get back close to Dow 11K will likely prove far too aggressive, but it's very likely this will have at least some legs. There's just too many people bearish and short for it not to last a bit longer (People who are short are at least not in the market will worry that we've seen the bottom and will fear missing out if the rally continues).

But also remember that V-type bottoms (where we sink dramatically only to immediately recover all that ground and then some, such that the price charts resemble the letter V) are very rare beasts.

In the short term, I think this rally could last a while but that the downtrend will remain in place and that we will revisit the lows from last week sometime in the next few months, if not sooner.

In the medium-term, if this winds up being just a normal recession, we have seen the lows and will probably start to move higher as much of the bad news and lowered profits have been discounted by the market. Remember, during your garden-variety recession, the stock market tends to do well since it begins to anticipate the recovery period.

Unfortunately, I think we are in for something far worse and we will likely meander in a range near the 8-9K level on the Dow for a year or more, and we could even end up breaching those lows from last week.

The problem is unless you're an active trader or will need a lot of your invested money sometime in the near future, you should probably mostly sit tight and ride out the storm. I've said it many times, this could end up being economic Armageddon but it's not the likeliest scenario and panicking or changing your long-term investment strategy won't do much to help you.

Add some gold (or gold ETFs or gold stocks) to your portfolio if you're really worried.

For an insightful, more positive take on the long-term prospects on the market, this provides some great analysis.