The debate going around Wall Street has now shifted to exactly what the stock market will need to hold its recent gains and move forward in the future. The month of March was a good one for the stock market, and thus far April has also proved to be a positive month as well.

What is behind the recent improvement in the stock market? Many analysts and strategists point to the economic news that has been “less bad” than it was before. In other words, the economic news has been bad, but it hasn’t been downright terrible like it was in the previous months. Another thing which has helped quite a bid is corporate earnings, and quite honestly they paint just about the same picture as do the economic reports. Many companies have been able to beat expectations, especially the financials, but in reality, the earnings are still quite poor. You could look at it one of two ways; one could say that the financials continue to struggle or you could say that there has been substantial improvement which bodes well for the future.

Economic numbers such as consumer confidence and even housing data have been on the rebound in the last month. If you put it into a historical perspective the numbers are still very poor, but given the desperately low levels they have come back from, the most recent data is certainly an improvement.

Now the question becomes, is less bad good enough for the stock market to keep it up? It is likely that for a while reports that are less bad than had been expected will be enough to help the market, but over time as expectations begin to rise again the economy will have to show that it can once again expand for the market to find its long-term footing. Less bad may be good enough for now, but in the long run we’ll need a little better.

It seems like this should be a given because of the horrific performance of the stock market indices over the past year and a half, but some still continue to let the last few weeks of gains cloud their view of the stock market. I strongly believe that the single biggest cause of the excessive optimism regarding the stock market’s performance is the financial news networks. Each of the last few days I have watched and heard them speak of how stock XYZ is up a “stunning 100%” in the past 3 weeks, only to fail to point out that despite that gain the stock is still down over 80% in the past year or two. Quite honestly, the major of investors who have held that stock during its tremendous fall probably aren’t horribly excited about the 100% gain in the last three weeks.

This isn’t to say that the recent gains aren’t a good sign overall, they may well be. I know I am certainly glad to see the 20% gain in most major indices. It is important to keep things in perspective and realize that while a little progress may have been made, the market and the economy have a long ways to go and the future is still very unclear.

The next time you turn on the television to listen to your favorite business news network remember to temper your optimism and hope for a long-term improvement in the economic picture. Don’t allow yourself to feel like you may have missed the train that is the stock market shooting straight up. The volatility will most certainly continue and the recent gains have not changed the fundamentals of the market as a whole. It’s fine to appreciate the stock market gains that occur, but don’t let them skew your overall investment plans or make you feel as if you are missing out on the rally of a lifetime.

The inevitable happened today. As an investor that saw the economic numbers and all of the stock market action in recent weeks you had to know that the Dow was going to break through last year’s closing low, and today it did. Today’s closing level of 7,466 on the Dow Jones Industrial Average is the lowest close since October 9, 2002. In fact, toward the end of the day the Dow actually briefly broke through the intraday low from last year as well, trading down to as low as 7,447 before ending the day down about 89 points.

Why is the stock market at a new low? Actually a better question would probably be why wouldn’t the stock market be at a new low right now? The economic numbers are looking worse and worse by the month and consumers are turning more sour on the economy by the day. The job market is the final dagger that has clearly broken the back of this economy and we are now in complete recession mode. The hope is a recession is as bad as it gets, but that is still unknown.

Quite frankly there are no catalysts at all right now to buy stocks and that is why we continue to see this slow drift lower that is hurting all of our investment portfolios badly. The stimulus plan will take a long to have any effect, the TARP program hasn’t shown any kind of real benefits to the financials, and the job market is looking worse than ever. The bulls will continue to say that many stocks are cheap on a valuation basis right now, and while they may be right, it is likely that those stocks will get cheaper before they get more expensive. Right now, valuing anything in this economy is next to impossible. Expect more of the same until a real catalyst begins to move this market in a meaningful way, and when that may be is quite unclear.