Was it just as simple as the turn of the calendar? Could it be the ugly bear is behind us, conveniently put into hibernation in the new year? I suppose some good feelings and a collective sigh are in order after the most horrific market performance in 75 years. What we have here is a new market of sorts, something that may look similar but is radically different. How so?

Fewer participants, less risky players, a global community and weakness all around. Some new things are in store that we'll have to get used to.

What Happened to the Fear?

Markets travel up more smoothly when there is a barrier, the proverbial "wall of worry." The declining worry is bothersome to say the least, but from the nosebleed heights it could be more relief than trouble. With declining volatility comes declining option prices, a lack of fear is only a temporary situation until the market is ready for a big whack. Oh, I suppose with the credit crisis being managed, auto industry bailouts and any others that are out there, and the hope from a new administration that good vibes are being felt, or perhaps it's just relief. Whatever the case, bull markets don't start from a high level.

Volume, or Lack Thereof

The biggest indicator for me of a market trend is participation, namely buying or selling in size. I like to see institutions moving in/out of stocks, which tells me big price moves are on the horizon. I'm afraid those days may be behind us. Why is this? Nobody needs to tell you about the trouble of hedge funds in the past year, many of these funds have become roadkill. Thousands of 'em, and then there is Madoff. Oh sure, they'll morph into some form of a hedge fund in the future, but now there is serious talk of regulation. Add to that the lack of participation of brokers who became banks (what, only a handful left?) and what you have is a barren landscape. The days of 20-25 billion share weeks on the buyside are probably history. Look at the distribution that took place from Sept-Nov 2008. Money went out the door faster than water out of garden hose.

One Thing Remains The Same

Let's say we agree that November 21 was the bottom, SPX at 740. Has this bottom been tested since? Absolutely not. Textbook bottoms are almost ALWAYS tested at least once, and this cycle will be no different. In fact, the longer it goes without testing the more painful the fall would be. One could argue that the recent fall was so bad because an interim low in Aug 2007 was never tested. As Mark Twain once wrote, history may not repeat itself but it certainly rhymes.

Price Headley is the founder and chief analyst of BigTrends.com.