Stocks have been on a tear this month, moving major indexes within striking distance of all-time highs. The bearish case is a difficult one to make right now.
Earnings have exceeded expectations, the housing and labour markets have strengthened, regulators in Washington no longer seem to be the roadblock that they were for most of last year, and money has returned to stock funds again.
The Standard & Poor's 500 Index has gained 5.4 per cent this year and closed above 1,500 - climbing to the spot where Wall Street strategists expected it to be by mid-year. The Dow Jones industrial average is 2.2 per cent away from all-time highs reached in October 2007. The Dow ended Friday's session at 13,895.98, its highest close since October 31, 2007.
The S&P has risen for four straight weeks and eight consecutive sessions, the longest streak of days since 2004. On Friday, the benchmark S&P 500 ended at 1,502.96 - its first close above 1,500 in more than five years.
"Once we break above a resistance level at 1,510, we dramatically increase the probability that we break the highs of 2007," said Walter Zimmermann, a technical analyst at United-Icap, in Jersey City, New Jersey.
"That may be the start of a rise that could take equities near 1,800 within the next few years."
The most recent Reuters poll of Wall Street strategists estimated the benchmark index would rise to 1,550 by the end of the year, a target that is 3.1 per cent away from current levels. That would put the S&P 500 a stone's throw from the index's all-time intraday high of 1,576.09 reached on October 11, 2007.
The new year has brought a sharp increase in flows into US equity mutual funds, and that has helped stocks rack up four straight weeks of gains, with strength in big and small caps alike.
That's not to say there are not concerns. Economic growth has been steady, but not as strong as many had hoped. The household unemployment rate remains high at 7.8 per cent. And more than 75 per cent of the stocks in the S&P 500 are above their 26-week highs, suggesting the buying has come too far, too fast.
All 10 S&P 500 industry sectors are higher this year, in part because of new money flowing into equity funds. Investors in US-based funds committed US$3.66 billion to stock mutual funds in the latest week, the third straight week of big gains for the funds, data from Thomson Reuters' Lipper service showed on Thursday.
Energy shares lead the way with a gain of 6.6 per cent, followed by industrials, up 6.3 per cent. Telecoms, a defensive play that underperforms in periods of growth, is the weakest sector - up 0.1 per cent for the year.
More than 350 stocks hit new highs on Friday alone on the New York Stock Exchange. The Dow Jones Transportation Average recently climbed to an all-time high, with stocks in this sector and other economic bellwethers posting strong gains almost daily.
"If you peel back the onion a little bit, you start to look at companies like Precision Castparts, Honeywell, 3M and Illinois Tool Works - these are big, broad-based industrial companies in the US and they are all hitting new highs, and doing very well. That is the real story," said Mike Binger, a portfolio manager at Gradient Investments, in Shoreview, Minnesota.
The gains have run across asset sizes. The S&P small-cap index has jumped 6.7 per cent and the S&P mid-cap index has shot up 7.5 per cent so far this year.
Exchange-traded funds have benefited from year-to-date inflows of $15.6bn, with fairly even flows across the small, mid and large cap categories, according to Nicholas Colas, the chief market strategist at the ConvergEx Group in New York.
"Investors aren't really differentiating among asset sizes. They just want broad equity exposure," said Mr Colas.
The market has shown resilience to weak news. On Thursday, the S&P 500 held steady despite a 12 per cent slide in shares of Apple after the iPhone and iPad maker's results. The tech giant is heavily weighted in both the S&P 500 and Nasdaq 100 and in the past its drop has suffocated stocks' broader gains.
On a historic basis, valuations remain relatively low.
Worries about the US stock market's recent strength do not mean the market is in a bubble. Investors clearly don't feel that way at the moment.
"We're seeing more interest in equities overall, and a lot of flows from bonds into stocks," said Paul Zemsky, who helps to oversee $445bn as the New York-based head of asset allocation at ING Investment Management. "We've been increasing our exposure to risky assets."