The massive reversal in stock prices yesterday was not the beginning of a new bull market. We’re nowhere close to even starting a new multi-year secular rally. The economy is in shambles, the financial system is still a mess and corporate earnings don’t look especially appealing amid a severe consumer recession.

Worse, credit markets have started seizing again since February and that spells more trouble for the economy.

Yet I think it’s time to unload or sell any reverse-index exchange-traded funds.

An incredible market development occurred recently as the Dow Jones Industrials (Dow) broke below 6,700 – its lowest level since 1997.

Stocks are now at the same level adjusted for inflation since 1966. Stocks have done absolutely nothing for your portfolio over the last 43 years and have badly lagged bonds and even T-bills.

Should stocks crash another 50% from current levels – an unlikely event – that will put the Dow at the same inflation-adjusted level as 1929.

The first European country to suffer from the ongoing credit crisis might also be the first nation to emerge from the crash. Though this won’t happen any time soon, investors should start scouring over the rubble following a total collapse of domestic assets, including the British pound.

The United Kingdom is suffering from its worst bout of credit deflation and bank insolvency since the 1930s.

One of the more widely used slogans to address this dismal market environment over the last 19 months is the “lost decade.” Japan suffered its “lost decade” in the 1990s as deflation and sub-par growth strangled the Japanese economy from 1990 until 1998.

Now it’s America’s turn along with the United Kingdom and many other international economies and they follow the United States into the economic abyss. Deflation is alive with a vengeance and, after 19 months of aggressive global policy response, remains a nemesis.

Credit turbulence is back again as we commence March trading.

Though several segments of the global credit marketplace have improved since crashing last September, others remain largely dysfunctional or under pervasive selling pressure in the midst of a rapidly contracting economy and the threat of bank nationalization. With the exception of non-financial investment grade debt and municipal bonds, most fixed income markets are in negative territory this year after a brief post-crash rally in November and December.

Amid the worst economic contraction since 1982, bond yields should be plunging. But that’s certainly not the case since mid-January as Treasury bonds continue to decline in value. If the economy is so badly fractured then why are bond yields rising?

Since the beginning of the year the yield on the benchmark ten-year Treasury bond has surged almost 100 basis points from 2.25% to 3.03%. The 30-year T-bond has declined even more as yields have climbed from 2.68% on January 1 to 3.71%.