The stock market rope trick

An old joke from the London Blitz of World War 2: A woman is making her way through the fog in London one day and passes a large cable stay with four tommies. The cable rises from the stay into the fog, where it disappears from view after about 20 feet.

"I say," says the lady to the tommies, "is there a barrage balloon up there?"

A tommy spits and replies, "Lady, if there ain't, I'm doin' the bloomin' rope trick."

Which is to segue into this question:

What is holding up the stock market? Because it sure isn't volume.

The stock market adage "Volume is the weapon of the Bull" means that Bull markets are powered by strong demand for stocks, which translates into sustained buying volume.

This year's dramatic rise in stocks coincides with a collapse in volume. If volume is the weapon of the Bull, and volume is declining, then what we have here is either:

1. a market that lacks buying volume and is thus held aloft by opaque interventions

2. a new kind of Bull market which rises magically despite declining participation by investors.

But the volume of trades don't support the rising prices. Here is the chart.

So what is holding the market up? Anything real, or is it doing the rope trick?

Update: Well, at the other end of the rope is not an improving economy or corporate earnings. It's the free federal money flooding the financial markets. This is called, "quantitative easing" and the second round, QE2, will end this June. Already, $500 billion of the programmed $600 billion has been pumped. But Wall Street did not funnel this money into the economy at large. It invested it for its own profit.