3/13/13 2:45 PM – Everyone’s Optimistic

Retail sales were reported up 1.1% today. Last week, the employment numbers appeared to be unexpectedly good. Now, the WSJ reports from a survey of business leaders that 71% expect sales to grow this year and are looking for overall economic growth of 2%. Finally, the number of people pullish on the stock market has been going up all year so far. Sound good?

Well, I applaud the stock market move so far. It appears to be an extension of the rally that started in mid-November and has given us a nice year so far. The S&P 500 index is up 9% YTD and we’re only 2 1/2 months into the year so far. Even so, the stock market sports only an average value.

I think we may have a short-term pullback soon, if only because so many people are now bullish and the market is up 15% since its November low. At least, we ought to see a breather here.

Another issue is that the S&P 500 is up more than the other indexes. Small stocks, tech stocks, European and Asian stocks all trail the mighty S&P. Even in the S&P, energy stocks, financial stocks, basic materials and industrials, the stocks that usually lead advances are instead trailing so far this year, with energy actually down so far this year.

I would wait for a pullback to put more into this market. I think we will see that shortly. In fact, a significant spring-time pullback has been seen in 2010, 2011, and 2012. I will be surprised if we break that streak in 2013.