I believe that oil is the determining factor in modern economies. With that in mind, it seems to me that in a world economy that is competetive for limited oil resources, one countries slowdown is anothers potential gain. China has become one of the U.S.'s main competitors for oil. China is trying to engineer a slowdown. It is hard for any government to "slow" a market based economy, due to the "hot money" that tends to go where the action is. If the hot money flees china, will it come here?
Oil price makes or breaks regional economies. The OPEC price hikes of the 1970's broke the U.S. The S&L crisis was was one result.
The subsequent decline in oil price through the 80's resulted in the oil money dependent USSR going broke.
The high price of oil in the 2007 resulted in the latest round of financial retrenchment.
Almost all countries have been debasing their currencies for the last several years. So the "effective" price of oil may be reset to a higher point. U.S. banks are fully capitalized, waiting for a pickup in the economy to lend. An easing of oil cost, or even holding steady for awhile may be the fuel for the fire here.
Even with long term interest rates moving up we may see the money break loose.(Bond funds in particular are losing money. It has to go somewhere.)
Many warn of the unempoyment picture as being a warning. Employment is a lagging indicator. Companys will tend to wait for their inventories to get low before hiring. Particularly after recent dangers.
I think that the workers who have dropped off the rolls of those looking for work may be related to the early baby boomers deciding to retire early. Many of them had huge gains in their real-estate over the past 30 years and I believe there are large numbers that have taken the opportunity to book their gains over the past few years, move to the more depressed areas of the country, and live off their gains. Many of those that lost their jobs the last couple of years probably collected unemployment insurance, but as it expires they simply stop "looking for work". And many may be content to be "under employed" forever.
The stock market may be due for a pullback, but so far the "bottom pickers" have stepped in to push it higher. The "tell" in markets is how well they handle bad news. ie, how well they bounce back after a selloff.
And as far as the argument that the volume is declining as the markets rise being a sign of weakness, I would propose that as buyers with the intent to hold come into the market, the fact of that holding will reduce volume. Less turnover.....