My take on the real reasons of rally

What are the real reasons behind the recent rally ?

1. The Fed successfully unfreeze the frozen credit market ?
2. The US stimulus program begins to filter through the economy ?
3. The worst is over for the US housing ?
   
4. The US recession is ending ?
5. Corporate earnings are improving ?
6. China stimulus are working ?
7. Massive liquidity in China ?
   
8. Decoupling theory again ?
9. The return of animal spirit ?
   
10. People are fed up with 1 - 2% return ?

I believe most of the answers to the questions probably will be YES but may take on the biggest contributors will be reason # 9 and reason # 10. To save you the pain I will not write a 700 pages report to justify my reasonings.

People are very angry with 1 - 2% return when central bankers around the world keep the interest rates very low. The fund managers will be fired if they garner millions dollar of fees for making 1-2% return. So they have to put cash to work. Worst still, many of them have been missing a 40% rally, they have been praying for 666 to return but the market hardly corrected with double digits, only one 9% plus pull back so far. They are(again) praying that S & P will pull back sharply when they are approaching 1,000 points, if the pull back is again very shallow, herds will chase only one direction - UP !

The cash/market capitalization in 2008/early 2009(110%) surpassed 1982 (100%). When the market started to rally in 1982 till we have 1987 crashed, cash pile(cash/market cap %) dropped to 65%. Back to present, from the highest cash pile of 110% dropping to 80% recently, is still way too high. The institutional investors will continue to deploy cash while retail investors are still scratching their heads - to buy or not to buy. (Click on the two charts below to visualize my narratives)