The stock market never ever fails to amaze me. I can’t help but think that in times like these the operating principle underlying the market’s actions is the financial equivalent of that hoary literary principle, “the willful suspension of disbelief.”

Let’s face it, most people want the market to only go in one direction–up. (Short sellers, you know who you are.)

Because of this and despite what’s going on in the real world, the hope for eternal upwardness is always ready to spring into action, latching on to the wispiest piece of halfway decent news in order to feel the rush.

Occasionally, however, reality intrudes upon this happy little scenario and The Fifth Dimension’s 1967 anthem, “Up, Up and Away” comes screeching to a halt.

You know, reality in the form of so-so earnings (or heaven forbid, a loss); a massive credit crunch; gargantuan write-offs of assets; slowing sales at retailers; mounting bankruptcy filings; skyrocketing foreclosures; increasing unemployment; inflationary pressures and not meeting analysts’ projections, to name a few.

When that happens, it’s like everyone arrived at the “Grandma, what big teeth you have” moment at the same time. Time to flee the cottage in the woods!

The pendulum quality of the market in the last few months particularly has gotten many people dazed to the point of paralysis. They can only watch and fear and hope.

What brings this to mind, particularly the hope part, is how the market reacted to JP Morgan Chase’s first quarter earnings report. The big bank, otherwise now and forever known as the White Knight that “saved” Bear Stearns (with a little help from friends at the Fed), took a bit over $5 billion in write-downs in the quarter, causing profits to plunge.

Considered in the harsh light of reality, not a performance to celebrate. But that deep-seated impulse to latch on to any wisp ignited a ferocious rally in the market generally (Dow up 257 points) and propelled Morgan’s stock up some 6.7% for the day.

Similarly, Wells Fargo, battered by the real estate market collapse, reported poorer earnings. Voila! Its stock rose 4.3%.

Not logical, as Mr. Spock would say. But the half-human side of Spock would know that logic has nothing to do with this. What it comes down to is these banks’ results, poor as they were, were not as bad as everybody thought they would be, meaning that they were instantly transmuted into good news.

One can only wonder what would have happened had the results been superlative.

There’s so much apprehension around and so much desire for this credit crunch/recession/asset write-off time to be over that any news that’s not as bad as we expected it to be suddenly becomes a harbinger of better things to come. No matter that no one really knows how deep the troubled assets go at institutions that played roulette and lost–every piece of not-so-bad news is light at the end of the tunnel.

Morgan’s earnings and the subsequent rocketing occurred but a day or two after GE missed analysts’ projections, sending the market into a massive tailspin because everyone was convinced the end of the world had come.

I’m as hopeful as the next guy, but this back-and-forth is giving me a pain in the neck. So, with this being America, I suggest we all sue for whiplash.