Let's think about this one for a minute.

In the last couple of weeks we've had:

• Awful auto sales. And let's not try to lay this off as "Detroit cars suck". Even Toyota's sales numbers are soft.
• Circuit City blew up on a sales warning and withdrew its guidance.
• Liz Clayborne imploded. And I do mean imploded. The story here is inventory markdowns and light orders from wholesalers. Their CEO says this evening that the problems are due to weakness in the consumer in the first quarter. Gee, you think?
• Wendy's, Cheesecake Factory and more all either warned, missed, or both.
• Target warned sales will be off plan.
• Walmart has announced sales expectations to be off-plan (lower, of course).
• Credit card debt is up precipitously. Just read the 10Qs from the firms that have reported earnings the last couple of weeks.
• Mortgage delinquencies are roughly double what they were last year. Again, from the 10Qs.
• Dozens of subprime lenders have imploded.
• Essentially all mortgage lenders writing anything other than agency paper (30/fixed, 36% DTI, 20% down minimum) have had horrible earnings reports. "Difficult" isn't the right story here - earnings of half or less of last year and that was made on the back of accounting gimmicks. Absent gimmicks many of these lenders would have shown a loss. More than one is unable to meet its dividend off cash income (never a good sign!)
• ISM numbers included a bombshell - bigtime energy cost increases. Hmmmm....
• Home Sale numbers are insane. In the bad direction. This morning's number on new contracts was not bad - it was awful. And this is supposed to be the "strong spring selling season."
• Homebuilders have reported terrible earnings (or even losses), are withdrawing guidance, and there is now the belief that several of the really big names in this space may violate lending covenants due to impairment charges.
• Royal Caribbean posted a lower profit this morning citing cruise demand that has been unexpectedly weak.
• GDP was minuscule and embedded in that release was a terrible inflation number
• The S&P500's earnings growth is running at about one half of the 2006 run rate.
• US-only (ignoring currency and foreign sales) you could cut the S&P500's earnings (not growth, gross earnings) by 40%! That of course would put earnings so far into negative territory that we'd be at DOW 5,000 right now.
• Gasoline is up 25% in most markets in less than two months.
• Inflation numbers exclude food and energy. Do you know anyone who doesn't eat or use energy? Neither do I. Add it back in then tell me what the real inflation rate is. 2.2%? Try closer to 6%.

So what's going on?

Same thing that has been going on. People chasing stocks. Bidding up the market because there's an "underlying bid." Bad news = stock goes up. Horrible news = stock goes down a bit. Great news = moon shot!

Just one example I opined on a week or so ago - AMD. Here's a company that had an earnings report that suggested that, if current trends continue for a few more quarters they might actually go out of business! Now they didn't actually say that, but that's what the numbers say.

So what happened? They said they were looking at "strategic alternatives" and boom - what was a certain haircut was erased in the market.

On the basis of what? A bid for the company? No. Not even discussions at this point.

Guys, its been a hell of a run. But we're within a hairbreadth of statistics on number of days with a positive close, and a few others, that were last seen in........ 1929.

Then we have my Canary...... and he's cowering beneath an oxygen mask, trying to keep away from the Cat.

And it appears that the Cat - or is it a Bear - is hungry.

Draw your own conclusions.