Is the correction in stocks from the April highs almost over? Or is it more than a correction -- is it the beginning of a new bear market?

The answer depends critically on what you think the economy will do. The idea that we're going to have a "V-shaped" recovery, so widespread near the top for stocks in April, seems off the table. Now everyone is expecting a "double dip" recession. If that happens, the stocks are headed a lot lower.

We never actually had much of a "V-shaped" economic recovery to begin with. So if the economy is headed south from here, it will be ugly. But I really don't think that's going to happen.

But let's take a look at the bear case. And who better to represent it than David Rosenberg, the celebrated economist with Toronto's Gluskin Sheff, who for years has articulately represented the darkest views on the economy.

As always, Rosenberg is very bearish. In his daily reports to clients, he throws the word "depression" around like rice at a wedding. But he bases his views on sophisticated readings of data -- and right now, he's focusing on 15 speed bumps for the economy. Let's look at them, and see if his case is a strong one.

His first four are really just one -- the housing market sucks.

* NAHB homebuilder index slumps from 22 in May to 17 in June, tied for the steepest decline in the past four years and a three-month low.

* Housing starts collapsed 10% month-over-month in May, to 593,000 at an annualized unit rate, a five-month low.

* New home sales plunged 33% in May to an all-time low of 300,000 at an annual rate. The housing inventory backlog surged to 8.5 months supply in May from 5.8 months in April, the highest volume of excess supply since last June.

* Mortgage applications for home purchases fell 15% in June after an awful 18% plunge in May, to stand at the lowest level in...13 years.

I actually agree with this, but it's hardly news. Housing has been scraping the bottom for the last year while the economy has recovered considerably. Why is it suddenly a show-stopper?

His next two are really just one also -- there are strong signs of deflation.

* Consumer prices deflated 0.2% in May after a 0.1% dip in June.

* Producer prices slipped 0.3% month-over-month on top of a 0.1% decline in May. The PPI has now declined in three of the past four months.

Deflation is a very bad thing (it caused the Great Depression!) -- fortunately, Rosenberg is cheating a bit here. The stats he cites are skewed by the recent drop in energy prices (a good thing). If you take that out, consumer and producer prices are actually inflating, not deflating.

Another two-fer -- these indicating that manufacturing is slowing.

* The ISM manufacturing index is down to 56.2 in June from 59.8, a six-month low.

* Manufacturing new orders shrank 1.4% in May, the steepest decline since the depths of despair in March 2009, and a new three-month low.

So what? Any ISM reading above 50 indicates growth -- and by historical standards, 56.2 is a very strong number. What, if we're not making new highs we're automatically slipping into recession? As to orders, a better indicator is new orders for non-defense capital goods excluding aircraft, and they surged 3.9% in May.

Here are three about the state of the U.S. consumer.

* Retail sales slipped 1.2% month-over-month in May, the first decline since last September.

* Auto sales fell 5% in June, to an 11.1 million vehicle annual rate, the lowest in four months.

* Consumer confidence sank to 52.9 in June from 62.7 in May, a three-month low. A decline of this magnitude is basically a 1-in-20 event.

Auto sales are in the gutter, to be sure. But, again, no news there. As to retails sales, it's only "the first decline since last September," as Rosenberg himself admits. The larger measure of overall personal consumption, which includes goods and services, is at all-time highs. As to confidence, I like it when it's low -- hard to get worse after "a 1-in-20 event." Doesn t that augur for a better economy ahead?

Now two for the labor market.

* Household employment fell 301,000 in June after a 35,000 loss in May, snapping a four-month winning streak.

* Wages declined at a 1.1% annual rate in June this never happened during the recession and is a 1-in-50 event. Rare indeed.

Yes, the labor market is seriously weak, but it's been steadily improving, and again Rosenberg is cherry-picking the data to make his case. Private payrolls have been growing for the last six months -- an unbroken winning streak. And labor income may have fallen in June, but it's still higher than it was in April.

We're almost done!

* Bank credit dipped 0.2% in June, the third decline in a row

Why stop there? Bank credit has been plunging for almost two years now, ever since the credit crisis hit. Hardly news. And besides, isn't it a good thing that the economy has recovered as much as it has without a new borrowing binge?

And last but not least:

* Exports dropped 1.4% in April and now down for two of the past three months.

OK, I concede that point. He's wearing me down!

But wait. I have a few "speed bumps" of my own -- and these are ones that will slow any weakness the economy may experience here.

* S&P 500 forward earnings are being upgraded at an annual rate of about 20%.

* The inventory-to-sales ratio is at all-time lows. So unless sales collapse, there's no inventory left to liquidate, and new inventories will have to be built.

* Disposable personal income has grown nicely over the last two months, without any contribution from "stimulus" transfer payments or tax rebates.

* Households are lean and mean -- in aggregate, they've shed $440 billion in debt over the last year.

* Housing prices have been stable the last year, while financial markets have soared, raising household wealth.

* The Federal Reserve is keeping interest rates at zero for the indefinite future.

* Mortgage interest rates are at an all-time low.

see my column last week.

I don t hold this list out as guaranteeing a "V-shaped" recovery. That's too much to hope for. But I think these items pretty much rule out a new recession. So with stocks as cheap on a forward earnings basis as they've been since late March 2009, I think it's time to start getting back into equities again.