Market looks poised to break out to the upside, strategist Jim Paulsen says

With the worst part of the earnings problem over and global growth looking better, there is no brake on the market rally right now, closely followed strategist Jim Paulsen said Thursday.

Interest rates are low, the dollar is somewhat flat, money supply is quickening and market participation is broadening out, he told CNBC's "Power Lunch." Plus, there has been a move toward more cyclical and risk-on portions of the market.

"This is a market that looks poised to break out to the upside," the chief investment strategist at Wells Fargo Capital Management said.

Plus, oil has been rallying, with U.S. crude settling 4.7 percent higher at $47.62 per barrel Thursday. Paulsen believes that will not only continue to help the market overall, it will also revive the sectors that have seen their earnings hit by oil's slump.

"If they revive minerals and mining and energy earnings portions, that's going to lead to an upward revision in earnings estimates, which I think could bring back some bullishness for stocks overall," he said.

While equities were trading down Thursday, the market is sitting near record highs. However, despite stocks "within an eyelash" of those highs, Paulsen said he's surprised by the lack of optimism.

He expects that optimism to come back after the market breaks higher and "that might be when this thing takes a pause."

— CNBC's Brenda Hentschel contributed to this report.