Investors have lived for half a year in the shadow of the bear, and now find the the indexes on the cusp of breaking back into the light. The market has burned up a brimming reservoir of pessimism and done just enough to encourage the bulls, without fully disproving the skeptics case that last year's highs will go unchallenged. Wednesday will mark six months since the S&P 500 reached its last record high at 2,930. The 20 percent drop from there to Dec. 24 was among the swiftest in Wall Street history. Its recovery of four-fifths of that loss in less than three months has been at least as extraordinary by historical standards. Last week's resilient showing nosed the S&P 500 up to a zone that has capped four rallies since October and three between February and June 2018. Certain strict market-cycle observers still consider the underlying bull-bear status of the market in play, viewing last September's high as a plausible peak and everything since as the opening movements of a bear market. That's perhaps a semantics exercise unhelpful to most investors, given the market is up a bit over the past year and less than 4 percent below that 6-month-old record. Doug Ramsey, chief investment officer at Leuthold Group, was positioned for a bear phase well before the fourth-quarter slide and remains skeptical, but still grants that the rebound has moved beyond a mere reflex rally: "Based on standard technical retracements and on our mortality tables for bear market rallies, the best-case S&P 500 bounce 'should' have exhausted itself in the 2,700-2,750 range." It didn't.

Hard to explain comeback

Still, while the recovery has outperformed the bear-rebound playbook, the market has not fully resumed the habits and attitudes emblematic of a humming bull market. And that might not be the worst thing for its prospects through this year. There isn't a catchy or fully satisfying explanation for why stocks have reclaimed so much lost territory so quickly. This explanation is pretty much it: that stocks overshot to the downside, exacerbated by a year-end liquidity air pocket, on worries about economic peril and central-bank error that have mostly gone unconfirmed — and that's now been reversed. The absence of imminent U.S. recession signals, an overt move toward policy patience by the Federal Reserve and sticky-low Treasury yields bolstering equity valuations — this is the palliative cocktail that eased Wall Street's end-of-cycle flu. Earnings forecasts for 2019 are down some 7 percent since October but have stabilized. Credit markets have firmed up, though not back to September levels of risk-acceptance. All this, for now, has been enough to rebuild equity valuations back toward their five-year average based on expected corporate profits. Those slim bond yields — with the 10-year Treasury beneath 2.6 percent and near its low for the past year — have done a lot of the work in supporting stocks. This chart from asset manager Robeco shows the equity-risk premium — the amount the "earnings yield" of stocks exceeds the risk-free Treasury yield — has scarcely eased since December. How much more upside can be wrung from these forces alone? A fair question. Roughly the same factors pushed the forward P/E for the S&P 500 in the first half of 2016 a bit higher than it is now, toward 17. The bullish take: If confidence returns about a resumption of earnings growth later this year, that risk premium has room to shrink through higher stock prices.

Investors still reluctant