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Bulls Gear Up for Another Run at 1,500 on S&P

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Wall Street's bull could take another run at the psychologically important 1,500 level as early as Friday, but that's a level that could also trigger a pause, analysts say.

The S&P 500 briefly broke above 1,500 Thursday for the first time since December 2007, despite the steep 12.4 percent decline in tarnished darling, Apple. The S&P ended the day up 0.01 points, or basically flat, at 1,494. The Nasdaq Composite Index lost 23 points to 3130, thanks to Apple, and the Dow Jones Industrial Average was up 46 at 13,825.

(Read More: Why Stocks Rallied Even While Apple Got Crushed)

"Fifteen hundred is a big level. This is where it died in 2000, and it died in 2007. This is the kind of the top of the dotcom bubble. This is a decade in the making and it's pretty big round number," said James Paulsen, chief investment strategist at Wells Capital Management.

But other than its psychological impact, the 1,500 level doesn't mean much for stocks, he said. Most traders are looking ahead to 1,565, the all-time high hit in 2007. Standard and Poor's said the S&P would have been up a half percent Thursday if not for Apple, which is 3.2 percent of the S&P, down from 5 percent in September.

Some traders had been looking for tech to help lead the market higher, and Apple's disappointment did not totally cloud that possibility. Paulsen points out that many technology companies were higher Thursday, and it was Apple and a few others that were impacted. Standard and Poor's said the S&P tech sector would have been up a half percent, instead of down 2 percent if not for Apple. Apple is still the largest company by market cap, $423.8 billion, just about $6.5 billion larger than Exxon Mobil.

(Read More: Apple Suppliers Slammed, but Experts Say Buy)

"The bigger news is you made your first attack on 1,500 and you fail," Paulsen said. "At least we made the first attack on it , and I'm sure we're going to make some more. That to me is progress. We went up and went through it awhile and we'll probably do that again."

If the S&P doesn't go through that level Friday, Paulsen said next week's long list of economic reports, including January's employment report, could trigger another run.

"Whether we get through it or not is going to depend on the reports," he said. "If the reports stay okay, I think we're going to continue. … A lot of times you pause around round numbers, so it wouldn't be terribly surprising if that happened."

Stocks could take aim at 1,500 again Friday though S&P 500 futures were slightly lower in after-hours trading Thursday.

Art Cashin, director of floor operations at UBS, said the direction of the market should soon be clear, after its strong new year's run. "I think we're going to know in a couple of days. We got to 1500. Everybody looked to see if there were any fireworks. Would the shorts panic? We didn't see anything. There was no immediate spike," he said on "Squawk on the Street."

(Read More: Douglas Kass on Apple: 'The King Is Dead')

The S&P is up seven days in a row, for a 1.7 percent gain. Standard and Poor's said the last such run was in October 2006, for a 1.8 percent gain. The last time the S&P rose eight days in a row was Oct. 27 to Nov. 6, 2004 for a 3.6 percent gain.

Mark Luschini, chief investment strategist at Janney Montgomery, said the market is looking overbought, and it is due to rest unless some new catalyst surfaces — either in very strong economic reports or a string of more powerful earnings.

"We know these big round numbers have a psychology related to them. It's tough to break through because it reminds everybody that you're at a level you hadn't been to in a good long while. If we do break through, I think we could slip even higher," Luschini said.

But it may also give traders an excuse to sell. "I think the market could be setting up for a pullback. If you look at the economic surprise index, it's rolled over. You've come to the point where the market has borrowed on some of the good economic news," he said.

(Read More: What's Wrong With Apple? It's Not What You Think)

Paulsen said the Citigroup economic surprise index, which recently turned lower, may be reflecting the string of weaker data that was impacted by Hurricane Sandy, and it could recover soon. The surprise index points lower when there are more misses versus beats in economic data.

What to Watch?

There are a number of earnings reports Friday morning, including Procter & Gamble, Halliburton, Kimberly-Clark, Oshkosh, Covidien, Weyerhaueser, and Prosperity Bancshares. New home sales are reported at 10 a.m. ET.

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

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