By Tom Dyson in The 12% Letter:

The 150-point rally in the S&P 500 has breathed new life into stocks... But don't let this rally fool you into thinking a new bull market has started. Before a new bull market can start, there needs to be a long period of "basing." This is the "sandpaper" stage that comes after the "guillotine" stage (the sharp drop).

The sandpaper frustrates bulls and bears with a series of quick rallies and declines. It redistributes stock from the weaker hands to the stronger hands. Bear markets never form new bull markets without this "sandpaper" action in between... I don't expect this bear market will be any different.

But this action is great for a covered call strategy. As long as volatility stays nice and high, we can keep earning huge option premiums... Our blue chip stocks and their covered calls keep cranking out 15% yields without any loss in principal... And the market doesn't punish us for selling the upside potential away to the options market.

Click here to learn about this strategy and the incredible "Dividend Capture."