This was a terrible week for the market in terms of news. Tens of thousands of new layoffs were announced. The jobs report was abysmal. Foreclosures are up. Home sales continue to fall and the Big 3 are back in DC, hat in hand. Yet, the indices not only held, but added to gains made last week. In the lingo of the Great Depression era that's so often alluded to these days "What gives?"
It's not that big a mystery if you don't try to over-think it. The Fed has been injecting trillions of dollars in new currency into the markets to replace the "toxic assets" that banks had been trading, until they realized they were toxic. There has not been a corresponding increase in the amount of corporate equities in circulation. The supply of one currency went way up. The other remained constant. The value of the dollar is simply falling with respect to equities as the market adjusts to the new currency mix.
No, this doesn't mean we're about to have a thriving, healthy economic recovery. It just means stock prices may spike, which may simply be a prelude to inflation throughout the economy.