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Many Retail Investors on The Sidelines

Tony Dwyer, equity market strategist at FTN Midwest Securities, told CNBC’s “Morning Call” that large numbers of individual investors don’t appear to be participating in the current rally.

“The individual investor is not back in,” Dwyer said Friday. “Last week, the American Association of Individual Investors were polled and 54% were bearish -- at (the market’s) 52-week high. To me, what creates double-digit gains and a 20% upside is valuation expansion which comes because you get interest in stocks.”

He said the market has room to run and expects the S&P 500 to be at about 1650 by the end of the year – and higher still in the next 12 to 18 months.

Sam Stovall, chief investment strategist at Standard & Poor’s, said he expects stocks to gain 6.5% to 8.5% this year.

Earnings growth is slowing in many sectors, but he likes healthcare and expects earnings to increase 17% this year.