The Dow Jones Industrial Average has recouped more than 50 percent of the losses from the October 2007 peak and the March 2009 bottom.

It’s been a remarkable rally, and the cheerleaders of the world’s major economies say it indicates a return of confidence to markets.

They say the world’s market rallies are based on galloping improvements in economic fundamentals, and this just eight months after many of them were predicting the end of the world as we know it.

It won’t have escaped history watchers, and perhaps a few others who need to get out more, that thus far, the rally looks and feels remarkably similar to the bear market rally after the 1929 Wall Street Crash.

It has been a low-volume rally, and a lot of cash is sitting on the sidelines.

Those holding the cash are either looking on enviously, waiting for a big correction in order to buy at lower prices, or they say they will remain in cash, reasoning that the fundamentals underlying the run up are far from solid.

True, corporate earnings are improving, but looking carefully, it is clear most of the improvements have been

achieved via cost cutting, mainly in the form of reducing staff numbers.

Unemployment is up sharply in most major economies, and many of those in work are working fewer hours and taking home less pay. Few, if any workers have even had a sniff of overtime in the past year.

In the U.S, personal saving has risen to 3 percent, and some commentators suggest it could reach 8 to 12 percent within two years as savers try to rebuild an asset base battered by the slump in housing and securities prices.

So in spite of the massive profits at JP Morgan and Goldman Sachs — none of which, incidentally, came from

lending to businesses or consumers — many are unconvinced that corporate profitability is on the road to recovery.

Moreover one or two problems still have to work their way through the economy, and through banks balance sheets. Commercial mortgages. Adjustable rate mortgages that are yet to reset. Credit card defaults.

Savvy investors are still trying to get some of the upside from equities, which still appear to be on a tear. They are however positioned cautiously, and ready to turn around their portfolios and flee to cash and gold (and perhaps large supplies of tinned food and a few automatic weapons) at the first sign of trouble.

Because if history is anything to go by, the lows of March were only the first act in this recession.