The most basic way to tell a bull market apart from a bear market bounce is by how the trading volume develops over the course of time during the up-move. In a bull market, trading volume starts out low at the beginning of the bull market and then goes up as the bull market progresses, with the most enthusiastic trading (high volumes) at the end of the bull market (of course - that is why most people ultimately lose money in the markets, they buy high and sell low). In a bear market bounce, the trading volume starts out high (because everyone wants to jump in thinking that it is a continuation or revival of the previous bull market) and then volume goes down as the bear market bounce progresses (since there are fewer and fewer people who have not jumped back in yet, i.e. buying stock to get back in). Near the end, the trading volume is quite low.
Trading volume on the NYSE has been quite low for months already - basically, since last October (2009). It was extremely low from about early December onward (which many people optimistically attributed to holiday trading - which is always slow - but that was an incorrect interpretation because holiday trading does not start until a few days before Christmas; the proof came when trading volumes did not pick up significantly after the first of the year, starting on the first Monday after New Year's Day when all the professional Wall Street traders come back to the floor after the holidays; volume has remained tepid even since then).
What that means is that the professional Wall Street traders are (fully) controlling the trading - there is almost no one else still participating in the trading, that is obvious from the low trading volume.
And the Wall Street traders are the ones who listen to Fed Chairman Bernanke the most and are also the most determined to support him by not allowing the stock market to go back down, thus supporting his effort to get the economy going again.
The problem is that the Wall Street traders are the least inclined to panic of just about anyone who might participate in the market (which is why it is holding up so well so far) - UNTIL something REALLY BAD happens (which is inevitable, sooner or later, in the environment of a large bear market, which is what we are in), and then they will panic in no uncertain terms, thus creating maximum panic conditions on Wall Street and creating the worst-case scenario possible.
It was, in part, anticipating this, that I realized, when I first found out about the law against recessions in the summer of 2001, that we were going to have a REALLY, REALLY BIG problem down the road, starting sometime in 2007-2010 when the next big downturn was due. I figured it will be a maximum possible disaster because I realized that in the context of a law against recessions, the economy would be pushed up to the absolute maximum extent possible, and the traders would push up Wall Street to the maximum extent possible - and then the whole thing would come crashing back down when it just can't be held up anymore. We have had a taste of that already - and we are getting close to the real thing, the really big downturn.
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