Robert Prechter, David Rosenberg and Charles Ortel have excellent and compelling reasons why the market will take an Icarus fall.  The bull market is on wings of wax; surely to melt from blistering layoffs and rising taxes.  This beauty pageant won’t last (innapropriate as it is, put on while people are losing their jobs and homes).  Comforting as a market rally is, we're still guilty for buying too many SUVs and speculative housing.

Tens of millions of Americans remain unperterbed.  Mutual fund redemptions are, once again, tone-deaf.  They tell the same story they told in  1987, 1991 and 2000 and 9/11.  Despite all the gloom and doom, the public isn’t quitting the stock market.  A friend of mine, who bought a bunch of survival food in the summer of 2007, has eaten through most of it.  He has no desire to go through a year’s worth of powdered milk again.  If a bread-line depression reappears he’d rather stand on line like everyone else.

In the fall of 2008 things looked bleak for equity funds (NYSEArca: SPY) everywhere.  About 1% of all equity funds were cashed out in October.  At that rate $900 billion could have abandoned equity funds—maybe even reaching a trillion!  But it didn’t happen.  Equity funds may be in a secular redemptive market, as more baby boomers retire, but there’s little proof that the market turmoil of last year has accelerated the process.

You can see for yourself at www.fundanalyze.com.  There is a Fund Flows section that shows sales and redemptions for most major funds.

It can be said investors are shifting money from equities to bonds at the rate of $10 billion a month.  Against $5 trillion in equity funds these numbers are small and so far inconsistent.  The tide could turn any day; no one would be surprised.

What if the market does crash tomorrow?  What does it mean if it comes back next month, next year, or in two years?  For most people the only time they think about the market is when they open their 401k account and when they close it.  In between, which is every day they walk the Earth, they don’t care.

To borrow an old joke, two investors read Prechter and decide the market is indeed coming to an end.  One decides to go on a two year cruise around the world, the other, in financial ruins, will short 100 hundred dollars.  The market crashes.  Through leverage and impeccable timing, the second investor makes $1,000,000 dollars.  Then the market rises again.  The round-the-world traveler comes back and asks if his friend can go to lunch.  'I can't afford it,' his friend wails, 'I lost a million in the market!’ 

The fact is, most wealthy people stay wealthy and most poor people stay poor, through all market cycles. (I’m not making this up!  I’m pretty sure this theory was once widely accepted.)

We're told by the media that there is a divide, a crack between populations of people.  It is always growing.  It is always threatening to amass anarchy.  I’m talking about the have-nots.  They have plans those have-nots have!  They have plans to have, those have-nots have. 

But the market remains aloof to the have-nots. The have-nots just don’t buy or sell stocks.  True, they have an economic impact on business.  They can bankrupt a retailer, like Circuit City.  And when their population grows they strain government services.  But they don’t buy stock.  They didn’t before they lost their job and they certainly don’t buy any after they lose it.

What the market likes to do is play games with the have-nots.  It makes some of them think they are haves.  But like everything it does, the market is fickle.

Every few years, the market creates millions of Americans who look like they have money (but don’t).  To borrow from Warhol, everyone gets their 15 minutes of having. 

In the population of people with real savings, real net worth, there are those with thousands and those with billions.  But even if both have their wealth cut in half, life changes little.  Why?  Because they don’t live on their savings they live on their income.  And funny, everyone who says they would live on their savings (or at least share them with others) never does as soon as they have them.

Maybe a billionaire can’t get used to five thousand bucks, but do many ever have to?  He just has to live with half-a-billion.  Anyone used to ten thousand can get used to five thousand.   They’re no more inclinded to sell a bunch of stock when the market goes down, to buy freeze-dried survival food, then to sell half their stock when it doubles to buy exotic race cars, though there is always a small minority in each camp that do both.

Social disconnects are not new.  W.H. Auden wrote a poem about a 1558 painting by Bruegel.  From “The Fall of Icarus”, Auden wrote. 

In Breughel's Icarus, for instance: how everything turns away
Quite leisurely from the disaster; the ploughman may
Have heard the splash, the forsaken cry,
But for him it was not an important failure; the sun shone
As it had to on the white legs disappearing into the green
Water; and the expensive delicate ship that must have seen
Something amazing, a boy falling out of the sky,
had somewhere to get to and sailed calmly on.

So what if the Dow goes down to 5,000 next month?  Will all the billionaire yachts disappear from the ocean?  Will any?

Personally, I believe the market will crash.  But I don’t know when.  (And as soon as it does, I believe it will rise).  Fortunately, most people want to live their lives on their terms, not the markets.  At least that’s what the fund data says. 

Max Rottersman is a specialist in industry data and systems development for the mutual fund industry. He's also founder of  FundAnalyze. His opinions don’t necessarily represent the views of ETFguide.com or Yahoo Finance.