The initial scare has gone from the market and it looks like the economy is showing signs of bottoming out, but it is difficult to predict where things will go from here, Jack Welch, the former CEO of CNBC parent General Electric, said Thursday.
"In general … business is pretty flat," Welch told "Squawk Box."
But "without question" investors are no longer scared thigs will go from bad to worse, he said.
The current environment is ideal for banks, which can borrow money cheaply and lend it at high rates, according to Welch, who also said financial institutions' behavior during the crisis has been normal, despite numerous critics.
"They were fighting for their lives, and I think they're doing the right thing," Welch said. The recent rise in the stock market has to do with bargain hunting, but it is impossible to predict what will happen to stocks next, he said.
"I think stocks were oversold and as the economy flattened, you saw these incredible bargains," Welch said. "If anybody tells you they know this market precisely, run. This is the most confusing thing I've ever seen."
He said nobody could answer the question whether stocks are likely to retest their November lows. "Listen, if you know, you tell me before the show is over."
Investors are still confused by mixed signals, such as high deficits and the government flooding the economy with liquidity, as well as by over-optimistic estimates about the health of the economy, he said.