Well, we have crossed the 10,000 point level on the Dow and the pundits are filling the pages of blogs and business magazines with predictions of all sorts.  The question they are asking is a simple one, really.  In the absence of any earthshaking news about positive developments in the economy, “what has caused this unprecedented run up?”

It’s a fair question, and no concrete answers seem to be at hand.

Let’s examine what we DO know:

1.  Unemployment continues to be an ongoing problem.  We have seen some incremental improvements in the number of people losing their jobs, but the numbers remain staggering.

2.  The housing problem, and the credit crisis that has accompanied it, is far from resolved.  Further, the problems in commercial real estate loans remain unaddressed.

3. On the other hand, September consumer spending numbers were fairly encouraging.  (with the exception of the automobile market)

4.  Our government continues to overspend and the deficit is a number nearly beyond comprehension.

There are a host of other factors, both positive and negative, that could be added to the list and be considered important.  Overall, though, the news has generally been less-than-positive and the market run up is difficult to decipher.  Several articles in ‘MarketWatch” claim they we have created a stock market bubble that is set to implode at any given moment, and you could make coherent arguments to support that supposition.

Other pundits, claim this market rally is a natural reaction to the public’s perception of the end of the recession.   Several economists have already declared the recession is ended and good times are headed our way.  I think this is a far more difficult argument to sustain, as the news and economic reports certainly don’t provide a huge amount of ammunition to support this argument.  Sure, there has been a smattering of good news here and there, but I would not describe the news as an “avalanche” of great news.  Far from it.

So, in my opinion, we find ourselves on shaky ground.  I honestly cannot predict another market meltdown, though the volume in this rally has not been impressive.  But a round of rosy economic reports would support the bulls in argument that the market has turned around.  I suppose the opposite would be true, also.

My expectation is for several months of conflicting reports about the state of the economy which will keep the market in the 9,000-10,000 range, whether it should actually be there or not.  But one thing that deeply disturbs me is this:  I feel like the employment situation must start to improve before any real recovery can be proclaimed.  There are simply too many Americans out of work and having little luck finding employment.