There are all sorts of reasons why the stock rally since early February doesn't make sense.
Technical analysis

Analysts at Bespoke Investment Group noted that while the latest rally has pushed more than 93 percent of stocks in the S&P 500-stock index above their 50-day moving averages—which smooths out price moves over the past 50 days—there may yet be cause for concern. The strongest moving average reading since the start of the bull market in 2009 is not necessarily a bullish sign for markets, they warned, as it could indicate that stocks have surged past fair value.
"With the rally of the last few weeks and looking at our daily trend work, the S&P 500 has reached its most overbought position since 2009!!" wrote analysts Michael Riesner and Marc Muller, with added grammatical emphasis. "We see the market vulnerable for a significant reversal this week, which we would see as the beginning of a tactical top building process and subsequent correction into deeper [second quarter]. We reiterate ... [that we] would not chase the market on current elevated levels."

Corporate profits (lack of)

The corporate earnings picture is ugly and getting uglier in a hurry, with S&P 500 (INDEX: .SPX) companies expected to post an 8.3 percent decline in first-quarter profits from the same period a year ago. While history suggests that earnings season always ends up looking better at the end than it did at the beginning, if the current trend holds up it will be the worst period since the third quarter of 2009, according to FactSet.
At a time when the stock market has just recently erased its losses for the year and bounced out of correction mode, the worsening earnings picture presents a formidable headwind. After all, analysts at the beginning of 2016 actually had been projecting a modest 0.3 percent earnings increase....
Unlike previous quarters where the damage was confined largely to energy and, to a lesser extent, materials, the profit declines are widespread.
Just three of the S&P 500's 10 sectors are projected to show growth for the quarter

Corporate accounting (lack of)

All of that’s well and good. But there’s an unsettling trend we’ve been witnessing: the gap between GAAP and non-GAAP numbers is widening. Specifically, this “GAAP gap” is widening in such a way that more and more costs and expenses are being removed to make underlying profits look higher.
“The gap between GAAP (reported) and pro forma (adjusted) EPS continued to widen in 4Q, with the GAAP/Pro forma ratio of 0.74 still at its most extreme levels since 2009,” Bank of America Merrill Lynch’s Savita Subramanian said on Monday. “Trailing four-quarter (2015) GAAP EPS came in at $87 vs. $118 for pro forma EPS.”

A different kind of housing crisis

“In our view, the recovery in existing home sales has been led by rising home prices, which has brought additional supply into the market,” Buchta said. This view which is consistent with the increase in investors buying existing homes as well as the high number of cash-only sales, which accounted for 25% of transactions in February.
“The lag in new home sales, on the other hand, is more reflective of the economy as a whole and has been adversely impacted by sluggish wage growth and tight credit windows.”
Peter Tchir, Buchta’s colleague at Brean Capital, also hammered on this idea of new-home sales as reflecting economic trends that have persisted since the crisis — slow wage growth, rampant concern about the future, and an underbuilt low-end housing market have all kept renters renting.
If we take the view that the jobs being created aren’t that great — which is an argument for another post — then what we’re going to see is a rising class of renters.
“These low paying jobs are not the type of job that are conducive to buying a home,” Tchir wrote.
“The first problem is saving for the down payment —a Herculean task in itself. The second problem, and the one that I think is addressed less frequently, is who really wants to commit to an area when the job isn’t that good and may not be stable?”
And if we consider that the economy is, as much as anything, a confidence game, the reality is that instability and imminent collapse have been the dominant psychological themes for both consumers and investors since the crisis.
So we can hit on the theme that the US economy is not heading for recession time and time again, but there is a reason Donald Trump is leading in the Republican polls: People do not believe in this economy.

How many U.S. troops are in Iraq?

The Pentagon is refusing to release the total number of U.S. troops deployed to Iraq, despite claiming for months that the full force is holding steady at around 3,800. On Monday, a Baghdad-based military spokesman for the U.S. effort in Iraq said he has been ordered not to divulge the true number, which could be hundreds higher than that. The spokesman, Col. Steve Warren, is himself not counted among U.S. troops on the ground, despite being based in Baghdad since last September.
Questions about the U.S. footprint in Iraq rose anew after an American Marine on a previously undisclosed mission was killed Saturday, when two Katyusha rockets launched by Islamic State fighters slammed into the outpost where he was based in the country’s north. His death forced the Pentagon to confirm the deployment of the 26th Marine Expeditionary Unit in which he was serving. As many as 200 Marines have been posted at the firebase just 50 miles south of the Islamic State-controlled city of Mosul.
Not only was the deployment of Marines from the 26th MEU kept a secret, but the newly-constructed firebase where its troops are living was also unknown until this weekend.

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