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The stock market doesn't reflect reality. Much of the activity is by a small group of traders, in particular, those of Goldman Sachs.
Keep in mind that some are trading with what essentually is "free" money from the U.S. government. Notice I didn't say "bailout" money, because the Fed, on its own, has disbursed about 2 Trillion, which far drawfs all the "bailout" money released so far. It's easy to drive up stock prices when one is using someone else's money to leverage investments with basically no downside risk.
Many folks speak of 1929 stock market crash, but the ultimate low in stocks came over 2 years later in 1932. Many feel the U.S. stock market is still way overvalued; think 400 S&P and 3,000 Dow. Anyone doubting that being possible need only look at what's happened to the Japanese stock market - it's still down over 60% from its high in 1989 (20 years ago!) and yet to recover.
Ron
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