Rather, market direction is a function of liquidity. Liquidity is defined as the change in the trading float of shares and the flow of money available to buy shares of stock. The float, which had been shrinking or flat between the end of 1994 and the end of 1999, on balance has been growing since then. When the cash takeover boom starts, the float will start to shrink dramatically. Insider selling particularly option sales is much lower than last year.
New offerings are also down big time while buybacks are holding up.
For now, the market might have bottomed, or not. But we are very bullish longer term. March 2000 tax collections were inflated by huge amounts of options sales. When most options are exercised, employers have to withhold taxes at ordinary income tax rates immediately. Last March marked the top of the wealth effect enhanced US economy.