One could argue we also fell for this at least to some extent (from Zacks):
Being overly cautious-to-bearish in Q1 was not a good strategy. I know because it's a trap I fell into. And now we watch several sectors eclipsing their Q4 highs, with Industrials, Materials, and Energy the standouts as the US dollar weakens further.
The arguments for being bullish are:
Here are the four main drivers of the current exuberance for US equities...
1) Earnings Recession Discounted: Investors seem to believe they have seen the worst at -10% growth for Q1 and that things will only get better from here.
2) Yellen's Fed As Dovish As Ever: The US dollar trended lower throughout Q1 on ideas that the Fed couldn't possibly hike at the March meeting. Since then, the "dot plot" and Yellen make the market believe the doves will only allow one hike this year.
3) Manufacturing Bouncing Back: Regional surveys from Richmond, Philly, Dallas, and Chicago all point to the national ISM number this morning getting back above 50.
4) Fund Managers Can't Miss Rallies: Besides the fact that they "have to buy" stocks with the money they are given, there are still few alternatives to US equity markets.
But then again..
And yet, despite five quarters in a row of year-over-year revenue declines, and despite four quarters in a row of year-over-year ex-bad-items earnings declines, the S&P 500 soared over the past seven weeks and is near its ludicrous high established last May
First-Quarter Earnings Are Now Expected to Really Suck | Wolf Street