PNC's Bill Stone also sees the potential for a pullback and said the market sentiment is likely to get a little less friendly as the rally runs on. The S&P 500 has now gained 50 percent since its March low.
"When I look at the valuations versus the normalized earnings number we use, stocks still aren't expensive.
They aren't as cheap as they were, but it argues for me to stay in there," said Stone, chief investment strategist with PNC Wealth Management.
Stone said he expects the market to stay in an uptrend through the summer.
"We do have an improving economy that we didn't have before," he said. "It's better to have a tail wind than wind in your face."
Among the sectors he likes best are consumer discretionary and technology.
The dollar was higher on the week, but it made most of its move up Friday after the jobs data, reversing an earlier move lower.
Traders watched this reversal with interest because it is counter to the typical moves the dollar has made lately.
The dollar, in a "risk" or "reflation" trade, usually moves lower as stocks and commodities rise.
The idea that rates will rise because of good economic news was a factor.
"The market is pricing in Fed tightening very early next year. But that seems very unlikely," said Marc Chandler, chief currency strategist at Brown Brothers Harriman.
Traders debated Friday whether the dollar's behavior means a new bottom has been carved out for the green back and also whether it indicates the U.S. will now recover faster than the rest of the world.
The dollar gained 0.6 percent against the euro for the week, but jumped 1.3 percent Friday alone.
To Chandler, the dollar's move higher is likely temporary. For instance, the Fed will not be tightening in the near future, and there is also no wider interest rate differential to justify it.
"It's hard to get a lot of conviction on just one day's move....I think what it means for next week is the Fed is going to have something in its statement to remind people that rates will be low for some time," he said.
As for commodities, oil gained 2.1 percent to $70.93 per barrel in the past week, while gold rose 0.4 percent to $957.30. Silver was 5.2 percent higher, and copper was up 6.3 percent.
Crescenzi said the Fed, in its statement Wednesday, will most certainly acknowledge improvements in the economy and in financial conditions.
"Secondly, it will indicate that it will reign in and stamp out inflation pressures as they arise. That's something they need to say because there is a camp out there that recognizes the data is getting better and that could pose inflation problems. But at the same time, they need to say that's way off," he said.
The Fed's two day meeting ends Wednesday at 2:15 p.m. with a statement.
Economic reports in the coming week include the NFIB small business survey which is released Tuesday, as are productivity and costs and wholesale trade.
Wednesday's data includes international trade and the federal budget.
On Thursday, weekly jobless claims, import prices and business inventories will be reported in addition to retail sales.
Consumer prices for July, industrial production and consumer sentiment are released Friday.
The Dow in the past week gained 2.2 percent to 9370, while the S&P 500 was up 2.3 percent to 1010.
Paulsen also said the "fear" factor that sent markets spinning lower last year is now turning out to be an advantage.
"Fear last year was one of our biggest problems. It's now become one of our biggest assets. Because our policy officials were so fearful last year, they shut us down with their policy and their words. They also did one other thing that's now a huge benefit - they over eased," he said.
"We would have gotten nowhere near the juice if they weren't so scared." "Secondly the fear in the business community caused companies to purge inventories and people," Paulsen said.
Companies now have operating leverage that should boost growth.
"They overdid it." Paulsen said in a climate like this, an important thing to watch is the market's technicals.
Scott Redler, of T3Live.com, is a technical strategist who watches the market's short term moves. He said the S&P 500 hit an important level Friday, 1015.
"The 1015 was the 38.2 percent retracement that a lot of technicians have been watching. That's an area that institutions sell," he said.
Redler said he believes the stock market's gains are now limited before it has a 10 to 15 percent retracement, and that it may have reached its highs for the summer.
"It could be that we've built ins a short term summer top, as we approach a seasonally soft time for stocks," he said.
The next area of resistance would be 1015, and that level could take the S&Ps to 1040, he said. If stocks decline, the support level for the S&P is 1000, a key psychological level.
Wal-Mart reports Thursday, as does Nordstrom and Kohl's . Macy's is Wednesday and J.C. Penney reports Friday.
Other companies report in the week ahead include Dish Network , Dynegy , Priceline.com , Sysco , Fluor , and McDermott Monday.
On Tuesday, Applied Materials reports after the bell. Sara Lee and Harris report Wednesday, and Dr Pepper Snapple , Estee Lauder and Autodesk report Thursday.
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