NEW YORK ( TheStreet) -- Call it a low-volume rally or irrational exuberance if you like, but betting against the bull market has been a bad idea for the last three years running and in particular, since the market rocketed up from a panic low last October.

Tuesday was no exception to the rule that being bearish only gets an investor burned, with the equity market hitting a level not seen since June 2008 -- pre-financial crash -- and the Nasdaq closing above the 3000 for the first time since 2000.

With a Wednesday economic calendar light on market-moving data -- import/export prices highlight the economic reports but rising oil prices are already factored into that outlook -- it's the fundamental question about whether this rally has another leg with which investors must contend.

As Bespoke Investment Group wrote on Tuesday afternoon in a report: "It seems like a day doesn't go by where someone isn't pooh-poohing the rally in equities and writing it off as a rally on low volume. If we could give one piece of advice regarding these naysayers, it is to listen to them at your own risk. ... Say what you want about a rally on low volume, but gains are gains no matter how they happen."

Bull market naysayers have little room to hide at this point.

With February retail sales data showing a U.S. consumer more willing to spend and the cautious Federal Reserve even forced on Tuesday to acknowledge that the U.S. economy is looking slightly better than some of its former commentary suggested, the trading chart continued to move up and to the right and in a major fashion, pushing to new multiyear-high points. All of the major indices were up more than 1.5% on Tuesday.

The release of the Fed bank stress tests added to the Tuesday momentum as the rally went from steady to super late in the session, with the announcement from JPMorgan ( JPM) leading banks that had passed the Fed stress. JPMorgan also announced it will buy back $15 billion in shares ($12 billion this year alone) and increase its dividend by 25%, from 25 cents to 30 cents.

The news wasn't all good -- the Fed also highlighted rising oil and gas prices as a near-term inflationary pressure --- and Citigroup ( C) was among the banks to fail the Fed stress test.

The front-and-center issue for investors on Wednesday, and for the foreseeable future, is how to play this correction-defying chart. Last Tuesday's selloff may now seem like an aberration -- the kind of profit-taking pause that will continue to dot the low volume rally -- but it is harder to have conviction about a significant correction right now, economists and traders say.

There are four ways to view the market amid the unabashed, if low-volume, bullishness: preserve capital and trade selectively, chase performance, bet that there's plenty of upside left in price-to-earnings ratios, or just sit the whole thing out, which is what many investors continue to do on the crowded sidelines.

"We are not outright betting against the market with the way it's acting, but we're not bullish here," said Kingsview Capital's Phillip Silverman. "I would expect to see these gains given back at some point in the future, but right now there is not much you can do. The market is very low volume but it's cranking."

The money manager said that for the buy-and-hold investor, the rally has resulted in P/E multiples that are hard to justify, and it's best to view the current run as a trader's bull market.

There is reason to expect the current confidence in the U.S. economy to weaken in the coming quarters too, said Ryan Sweet, Moody's Analytics economist. Sweet said rising gasoline prices actually helped to push retail sales higher in February, but the "oil shock" may still be in the cards as gas prices march up into the summer. This was one reason the Fed was forced to put into its statement the reference to oil and gas prices: It doesn't want to seem tone-deaf on an issue that is front and center for consumers.

"The economy is improving, but the warm weather may have juiced the retail data, and gasoline prices become more problematic the more they move above $4," Sweet said. "This pace in retail sales spending is not sustainable, and by midyear, job growth will be back below 200,000. It's a welcome surprise, but we will see softer reports from retail and labor markets," the Moody's economist concluded.

Michael Hanson, senior economist at Bank of America Merrill Lynch, said investors reading any incremental optimism into the Fed statement on Tuesday may be mistaking a "mark-to-market" process (that the Fed has to perform) for bullishness.

"No significant changes, no real surprises. I don't see the Fed as getting really hopeful on the unemployment rate just yet, but they cannot deny that the data have generally been better," Hanson wrote in an email to TheStreet. "I think the fact that the Fed reinforced its expectations of a modest recovery and inflation at or below target -- and downplayed the easing in global financial market strains as well as the inflation risks from oil prices is a clear statement (in my mind) that the Fed is not planning to budge from its current accommodative stance anytime soon.

"With the microscope out, one can find all sorts of things the Fed might have left in or taken out (or neglected to put in) to support a more hawkish or dovish spin, but the bottom line as I see it is that the Fed is standing pat for now."

Stocks have done anything but stand pat and at the end of another day of bullishness, headed into Wednesday, one thing was clear to Gary Thayer, chief macro strategist for Wells Fargo Advisors: Stocks remain the market's best bet.

"We won't see a quick reversal in the easy money policies of the central banks globally, so there is still some upside potential. There will be some profit-taking and volatility, but right now it still looks like path of least resistance is up," Thayer said. "I don't know that last Tuesday's downturn was the end of it. We could see another pull back, but I don't expect a major downturn. It's still buy-on-the-dips," Thayer concluded.

-- Written by Eric Rosenbaum in New York.

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