In fact, manufacturers have let inventories get so low that they have to increase production. Any orders coming in now are hard to fill because there is no stock. It's been allowed to deplete as manufacturers didn't want to take a chance of the economy getting worse. So they're down to the bare bones. They have to produce some products just to keep up with the lower current demand. That means no more lay-offs at most manufacturers. Past Chairman of the Fed, Alan Greenspan, believes the rebuild of inventories alone will give the GDP a boost in the third quarter.

Take the car industry as an example. Up until a week ago, before the CARS program (cash for clunkers), auto inventories were high, production was shut down for most models, waiting for lots to clear. Now, for many models, especially the more fuel efficient ones, inventory is gone, and new cars have to be built to meet demand. That's the first good news the car makers have had in months. The hope is that demand will stay strong, creating even more jobs as new workers are needed on the assembly line. If that happens, then all the companies that feed the auto industry have to ramp up as well. The ripple effect is very strong. Almost as powerful as the housing industry.

And that's showing signs that the worst may be over. The latest pending homes sales numbers show that for the fifth month in a row, pending home sales rose. While the majority were in first time and lower priced homes, at least sales are closing, suggesting that the downward trend has stopped.

That's really the point here, not that we're looking for a great rebound for the economy because that's very unlikely. Too many people are out of work. Some economists believe new job creation won't be meaningful until the second half of 2010. But they could be wrong. Even if new jobs appear in the latter half of this year or early next, there won't be many as employers are reluctant to hire until they can see a tsunami of orders that tells them the recession is over. Better to stretch everyone who's currently on payroll than to add more people and then have to let them go.

All of this has investors hoping that the numbers only get better. And they should. Consider earnings. This recession began to bite hard toward the second half of last year. Earnings were coming in well below estimates. Third and fourth quarters were disappointing. The market tanked, especially in October/November, then again in March. Earnings going forward will have a much easier time of beating last year's earnings in the same quarter. Some may be much higher because of one time charges taken for so many lay-offs. Look for earnings to show significantly higher percentage increases in the third and fourth quarters, especially from manufacturers building up inventories again.

There is some data to fuel this market, but I don't think enough to justify the large increase we've seen in one month. Once again the market is showing it runs on emotions. Just as so many investors were depressed in March and took the Dow Jones to extreme lows, now many investors think the worst is over and are buying stocks.

The worst may be over, but that won't be known until we see the numbers over several more quarters. If they continue to improve, showing higher sales in everything from cars to houses to apparel, and profits are jumping higher than currently forecast, then this market is in the right place. But my guess is that we're a little ahead of ourselves and if we don't keep getting good numbers the structure for this rally is a little shaky. I don't think we're going back to the old lows of March. But it's hard to make the case that all the banks are in good shape, that defaults on mortgages and credit cards are done, that housing sales are moving up in price and multiple offers are common, or that new cars are going to keep flying off the lots.

Ted Allrich is the founder of The Online Investor, founder of Allrich Investment Management, LLC, as well as the author of the book Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he offers advice to investors who are just getting started.