US Markets

Jim Paulsen: 'We're setting up for another run'

Jim Paulsen: Why the S&P should break 1,900 soon

With the Dow at all-time highs and the closing in on its own record, one closely watched strategist says he senses the market wants to go even higher.

Wells Capital Management's Jim Paulsen believes the market has corrected many of its imbalances in recent weeks, from the current rotation out of momentum names to "excess sentiment" in more defensive names. That's setting up the market for another bull run, despite five years of record highs and valuations since the 2008 financial crisis, he said in an interview with CNBC.

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"What we're doing is refreshing this bull market in the last several months," Paulsen said on "Squawk on the Street." "We've corrected any excess valuation. We've corrected any excess sentiment that's creeped up. ... We're setting up for another run."

Jim Paulsen
Adam Jeffery | CNBC

In April, Paulsen told CNBC he expected the S&P 500 to surpass a record high of 1,900 and toward 2,000. He said the S&P should reach all-time highs soon. The S&P saw a 14-point gain in Monday's opening trades, hovering at around 1,892.

"You don't want to be out because it just seems like there's momentum and you want to be in this thing," Paulsen said. "It's probably going to go up over 1,900 pretty soon."

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Paulsen said the market's "persistence" fuels the current optimism.

"We've had bad first quarter growth," Paulsen said. "We've had weather-distorted and bad economic and earnings reports. We've had geopolitical unrest in Ukraine. We've had to deal with tapering and yet the market is going to new highs."

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—By CNBC's Jeff Morganteen.