It's great to have highs but the S&P 500 is still unable to break out, leaving the market at the same spot it was in February, said Matt Maley, managing director and equity strategist at Miller Tabak, on Monday.
"Not being able to break out either is a concern particularly for me because we have several issues. Number one, stretch valuations and number two, poor to negative earnings growth," said Maley during CNBC's "Power Lunch."
"GDP: We thought the second quarter would be a little better. It's going to be positive, but not enough to make the whole first half positive."
The closed at 2,129.20 on Monday, and the Dow Jones closed at 18,298.88, both setting records.
Maley said that the highs will only have a limited upside. He added that a pullback might be healthier for the market.
"I think it will be positive, actually, for the market to pull back and not just 2 or 3 percent," said Maley. "I am thinking more 7 to 10 percent. We don't have to call for 2007 or 2000's 50 percent disasters."
At least 5 percent to 7 percent pullback will be enough to take some of the sentiment out of the market, Maley said.
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Maley added that financial stocks have been acting well, which started with regional banks. If the financial stocks break out more, it will be positive overall.
"In the last week or two, the banks have started to pick up and we have higher highs," Maley said. "There has been a high correlation between S&P and the BKX bank index since the crisis lows."