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.