Let me ask a question. When the recession ended in 2001 did it coincide with the stock market bottoming?
Did the market collapse in 87 signal a coming depression or even a recession?
Did the push to marginal new highs in Oct. 07 signal that the economy was running on all eight cylinders?
The answer to those questions are no, no and hardly.
Stock markets are and always have been governed by human emotions. Does anyone realistically think that the stock market, no matter how many investors this includes, really has the ability to "see" the future? I guarantee you it does not.
The stock market will just continue to cycle through periods of hope and negativity like it's always done for hundreds of years. At times the cycle of hope will correspond or even lead an upturn in economic activity. At other times the cycle of negativity will continue to bring the market down despite obvious economic improvement.
It really has no bearing on whether the economy has bottomed or not, the market still has at least another year to year and a half before we can expect the secular cycle of negativity to reach a final bottom.
As I've said many times before I expect at that bottom to see true bear market conditions as human emotions do their work and take valuations to absurd levels.