One very simple way to tell a bull market from a bear market is to look at the up days and the down days.

Contrary to what you might think, even in a bear market, most days are up.  But the up days are right around breakeven and the down days are wickedly bad.  In an up market, on the contrary, the down days are isolated and end up not doing much damage.  Not all, but many, of the up days are really good.

In a down market, stocks slice through technical support lines like butter and are firmly capped by resistance.  In an up market, the opposite is the case.

What’s interesting about the current market is that on the S&P’s journey up from the mid-600s, we haven’t achieved a correction that comes anywhere close to the technician’s smallest magic number of a giveback of 1/3 of the advance.

Fundamental support of a sort continues to come in for the US market.  This morning’s unemployment report is an example.  The news from Asia is much better.  While the domestic jobless numbers suggest only that we’re nearing the bottom for the economy, Pacific data strongly suggest that they’ve already turned the corner and are headed up again.

The conventional wisdom is that US consumers will continue to keep a firm grip on their pursestrings for years to come, while they repay credit card debt, but there is no such constraint on domestic economies in Asia, which, ex Japan, have a faster trend growth rate anyway.

Why the continuing strength in the US market?  Why not a pause for a while, after a 40%+ rally–all with a relentless pro-cyclical bias?  One reason might be that we’re only around breakeven for the year.  More important, polling suggests that professional investors as a group have badly misread the market and have lots of uninvested cash.  Also, as I’ve mentioned elsewhere, this is the classic pattern of bull market development described by John Train years and years ago.  As well, I suspect that because the center of economic distress is the financial community, money managers have found it difficult to separate the sharp decline in their personal circumstances from the somewhat better state of the overall economy.

One other thought:  in today’s world, it’s a mistake to simply go from the growth (or lack of it) of a country’s GDP to the health of its stock market.

The UK is an easy example.  It has either the second or third largest economy in the European Union, depending on who’s counting, but it has be far the largest stock market.  This is partly because big parts of the largest economy, Germany, aren’t publicly listed, partly because the UK market is home to lots of firms with global reach, where the UK economy isn’t crucially important.  In fact, at a time like this, portfolio managers should orient their holdings to emphasis the international firms and underweight the domestic ones.

Hong Kong is another.  The physical location continues to be important as a gateway to the rest of China.  But the stock market is significant mostly because you can buy mainland companies there.