Patience is needed here

Market is making higher highs and higher lows at less and less volume! That is a strange way to start on a bull market run. This pattern happens only at the end a bull market. I just don't understand how a sustained bull market can take hold if you have decreasing number of new participants. That is why it is difficult to participate in this run. Recently I got whipsawed couple of times and when that happens it is time-out time. Today the action in the last minute was surely short-covering. There is a positive bias to the market and short-term traders don't want to hold their short positions going in the weekend. SP valuation is PE 18 and if you give a really rosy scenario of 40% gains in earning over the next year then you will get a PE of 14, which is the average long-term PE. I heard someone making this argument to suggest that SP500 is undervalued at this level. I guess it is possible that the world economy will bounce back really fast but it appears quite an unlikely event given the stress in the US economy. At no time the PE of this market has gone below the long-term average despite all the carnage in the market. (Thats how much the market was over-valued before and how much the earnings have come down.) That bit of information is also puzzling, since almost all naturally occurring systems tend to overshoot in both directions of the average. We know P part of PE but have we changed the way E is calculated so that E calculated according to present-day formulas gives us a low value and hence large PE? I don't know. But it is strange that we haven't gone below the long-term average in this bear market while we had done that in ALL prior bear markets. Maybe someone could comment on this.