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Will Market Retest The Lows?

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It seems like this latest rally has momentum. But will the market ultimately go back and retest the lows?

The long-awaited U.S. government plan to rid banks of money-losing assets has injected some desperately needed optimism into Wall Street.

Judging by the 20 percent run-up in the benchmark S&P 500 index since its March 9 bear-market closing low, there appears to be a burgeoning consensus that some confidence maybe returning to the marketplace.

But considering a bottom has eluded the U.S. stockmarket since the fall of 2008, there remains plenty of concern the recent spurt of gains could yet again be another false dawn.

And investors have good reason to be gun shy. The CBOE Volatility Index, a key measure of fear in the market, remains highly elevated, above 40, and inside a range at which every other rally since January has failed.

“I keep looking at the Vix – and until it can break below 40 it says there’s still a lot of uncertainty out there,” comments Pete Najarian. "It used to be, we thought 30 was high."

"Given the many false starts in the equity market, VIX remains range-bound as investors aren't yet convinced that the recent rally is any different then the countermoves seen during the ongoing bear market, like the 25 percent rally in the S&P 500 from late November to mid-January," adds Frederic Ruffy, options strategist at WhatsTrading.com.

Even so, the magnitude and the pace of the market's recent run-up in just 10 trading sessions, has some market watchers hopeful that Wall Street could add to recent gains.

"We think there is a very good chance that the lows are in place for the stock market," counters Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, Tennessee.

"Bear markets end when they start deciding to go up in the midst of continuing and probably worsening news, says Michael Williams, chief investment strategist at Tocqueville Asset Management.

“Once we know we can continue to see poor news be greeted with either much less selling or a rally, then capital is telling you it has priced-in a worst case scenario."

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Trader disclosure: On Mar. 25th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Macke Owns (AAPL), (POT), (WMT), (MOS), (GE), (SDS); Macke Is Short (BRK.b); Seymour Owns (AAPL), (BAC), (FXI), (TTM), (AUO), (WBD); Najarian Owns (C) Call Spread;Najarian Owns (AGN) Call Spread; Najarian Owns (AAPL) Call Spread: Najarian Owns (BX) Call Spread: Najarian Owns (GD) Call Spread: Najarian Owns (MS) Call Spread: Najarian Owns (PALM) Calls; Najarian Owns (RHT) Calls; Najarian Owns (XHB) Call Spread; Najarian Owns (SWY) Calls; Najarian Owns (XLI); Najarian Owns (STX) Calls; Najarian Owns (WDC) Call Spread

CNBC.com with wires