During the two and a half months that followed the February 11th lows, the stock market took a near vertical escalator upward, adding trillions of dollars in paper wealth and coming within 3% of the all-time highs.
You would think that everyone was bullish on the economy and the companies that issue these equities, but you would be wrong.

Here’s what happened during the rebound in equities that added nearly $3 trillion to U.S. share values in 10 weeks: mutual funds hoarded cash, short sellers tightened their grip on bearish bets and individuals bailed out of the market.

Mutual funds mean small investors, and that generally means "dumb money". Wall Street makes their livings betting against them. However, retail investors aren't the only ones selling.

In normal times, corporate buyers are the smart buyers. But is that true this time?

Based on the 55% of companies in the S&P 500 index that had already reported results Thursday morning, Thomson Reuters expects overall earnings to decline by 6.1% in the first quarter compared with a year earlier. ...
This would mark the S&P 500’s third consecutive quarter of declining earnings—the longest streak since the financial crisis. Revenues will have declined for five quarters in a row, outstripping even the four-quarter slide in 2008 and 2009.

Falling earnings are not a positive in any financial universe, but that isn't the worst of it.

According to Andrew Lapthorne of Société Générale, the reality is that “US corporates appear to be spending way too much (over 35 per cent more than their gross operating cash flow, the biggest deficit in over 20 years of data) and are using debt issuance to make up the difference”....
Cash-funded mergers and acquisitions are at a record. In the four quarters to the end of last September, according to Ned Davis Research, S&P 500 companies spent $376bn on acquisitions, 43 per cent above the prior high in 2007, ahead of the credit crisis.

Literally, the only reason stocks went up is because companies borrowed money to buy their own stocks.

Standard & Poor's 500 Index constituents acquired roughly $182 billion of stock in the first quarter of 2016 alone.

And borrow money they've done, in record amounts.

Referring to the US, the IIF said companies were borrowing as if there was no tomorrow even though their profits began to decline in 2014. It said the ratio of net debt to earnings (EBITDA) for companies was at 1.4. This had doubled since the 2007 subprime bubble, according to The Telegraph.
"For the most part, this very significant amount of debt has been used to pay dividends, buy back shares and fund M&A transactions, rather than financing capital spending, which has been on a declining trend since 2012 (and fell 3.5pc in the first quarter on 2016)," the IIF explained.
On junk bonds, a high-yielding high-risk security, typically issued by a company seeking to raise capital quickly, Europe and the US put together are reported to have issued them at double the pace when compared to the pre-Lehman period. "Of particular concern is that since US high-yield companies have increased their debt relative to assets, the recovery rate on defaulted bonds has declined sharply," the IIF said. It added that corporate defaults were at the highest levels since the financial crisis and it was "not restricted to the energy sector."

Well, heh. Maybe they know something about the economy in general. Maybe the economy is turning around. Or not.

Gross domestic product increased at a 0.5 percent annual rate, the slowest since the first quarter of 2014, the Labor Department said on Thursday in its advance estimate...
Almost all sectors of the economy weakened in the first quarter, with the housing market the lone star.

Underlying indicators are no better.

US industrial production (manufacturing, mining and utilities) declined at an annual rate of -2.2 percent this past quarter, after having declined -3.3 percent the preceding quarter. Industrial production has fallen six of the last seven months. US industrial capacity is now at its lowest point since 2010.
Business investment is another trouble spot. Investment in business structures fell by -10.7 percent and investment in new equipment by -8.6 percent, the latter the biggest drop since the 2007-09 recession.

Profit problems are especially pronounced in the financial centers.

Virtually every major bank in every major country reported Q1 earnings ranging from disappointing to catastrophic. To take just one representative example, Deutsche Bank’s profit fell by 58%, and it is now shedding 35,000 workers in 10 countries while eliminating half its investment banking customers.
It’s like that everywhere. Even Goldman Sachs, whose former (and future) execs hold decision-making roles in virtually every Treasury and central bank, is hurting..

Why is that? Ironically, banks are hurting because of the methods used to save them.

First, QE and negative interest rates turned out to have unintended consequences, one of which is a drying up of bond trading. If governments buy up all the high-grade bonds then obviously there aren’t many left to trade. And if the yield on new bonds is negative, holders of existing positive-coupon bonds have no incentive to sell them. Hence, eerily silent trading desks around the world.
Second, the financialization of the global economy has created a vast sea of hot money that flows mindlessly from one location and asset class to another on a scale that exceeds traders’ ability to predict and/or manipulate. Put another way, in a world where it’s impossible to know what’s going to boom or crash next, it’s irrationally dangerous to place big bets on anything.

Eight years of emergency monetary policy, even experimental monetary policy, is choking the financial markets. Stock and bonds move in ways completely divorced from their underlying fundamentals, and that isn't healthy.
People aren't buying this stock rally because there is no financial logic behind it (unless you are expecting QE4), except for chasing the momentum. And that is a game for insiders, not long-term investors.