People are spending less money; they are being frugal with it, making hard choices about what to buy based on need versus want.

Vacancies are showing up with greater numbers when I look at the various strip malls near where I live.

People are worried about their jobs; some have lost theirs and indicate problems with finding new ones. I don’t know anyone who has filed for unemployment, however.

I feel a permeation of caution bordering on dismay from people with whom I interact on a daily basis; there is a lot of worry.

If psychology is the driving factor behind The Miracle Rally of 2009, I certainly don’t see that hope, optimism, and confidence around me from the people at large. What I see and feel is contrary to the action in the markets, which has caused the confusion to me, at least until recently.

I tend to agree with others here that QE is at the root of all this. That, and the confidence in the government to bail out companies that are too big to fail. But that is all institutionally driven, and that makes sense given how money that is printed makes it into the economy – as deposits into Reserve Bank Members, which are used to make loans or investments.

Until the trenches (the streets where I live) begin to reflect the apparent “physchology” of the market, I’m not buying it – it just doesn’t feel right. That doesn’t mean, however, that we can’t ride the wave to benefit ourselves. I do, but I also have stop losses in place known only to myself to ensure I won’t be crushed when QE stops being effective; it certainly can’t sustain the markets forever.

http://www.businesscycle.com/news/press/1567/

when is his WLI going to at least flatten out; maybe when the mainstream econ data data gets ‘main street’ better, the AAII #s will climb above 50% bulls and we will have a meaningful correction, today was our 6th neg reversal since early Aug.

I agree with Don and several others on this one. Mish has said the same thing. The fuel that has fired this market is QE by the Fed. Without that money there would be no upward movement, which then fuels your psychology. But Mish has shown that the majority of the money coming into this run has been from the government.

Capitalism was intended to function in a free market. Not one which is manipulated by a central bank for political reasons.

The recent turmoil is not a fault of capitalism but the politicians and central bankers who take advantage of it.

I think we continue to whistle past the graveyard. Do we make it, I hope so for everyone’s sake.

But I remain very very concerned when fundamental problems are not addressed.

And to answer your earlier point, yes, when the market was dropping it was on heavy volume and yes, it was real, honest to goodness selling.

For this “rally” draw a line on volume and price rise over the last six months and I think you’re going to see an interesting story.