Market Preview: Wall Street Stampede

Updated from 6:46 p.m. ET to include information about Micron's analyst conference.

NEW YORK (TheStreet) -- It remains to be seen if this rally has legs but there's little doubt that stocks have built up quite a head of steam.

As previously remarked, bullishness seems downright contagious these days. Everyone from Dr. Doom to now the Oracle of Omaha thinks U.S. stocks are the cat's pajamas. Staying on the sidelines is getting costly.

The latest sentiment survey from the American Association of Individual Investors put an exclamation point on the rampant enthusiasm for equities on Thursday. The organization asks its 150,000 or so members each week where they think stocks are heading in the next six months, and the bull camp is overflowing at the moment.

An amazing 51.6% of respondents declared themselves bullish this week, up 7.8 percentage points from last week and the highest reading since May 2008. For perspective, the long-term average for bullishness is 39%. Both the neutral and bear camps thinned out over the past week, coming in at 28.2% and 20.2%, respectively, well below long-term averages of 31% and 30%.

The argument for stocks is compelling. The U.S. economy is slowly getting better, bonds yields are negligible, corporate earnings are still growing (albeit at a slower pace), and The Federal Reserve has pledged maximum accommodation with most market watchers expecting a dose of QE3 to come along in 2012 to grease the rails. Thanks to the European Central Bank's long-term refinancing operation in December, the old continent is stabilizing (sort of), and Europe's banks will get another chance to feed at the LTRO's trough later this month.

Against that backdrop, it's easy to see why the bulls are in stampede mode. To be clear, Europe is still a big worry -- past austerity measures haven't exactly worked wonders for Greece -- but judging by the yields on Italian and Spanish bonds, the market is warming up to the idea that the contagion has been contained.

This rally seen some criticism because it's been a low-volume affair, and with the VIX closing below 20 for nearly three weeks now, all volatility seems to have seeped away, which is a trifle unsettling but nothing to get caught up on.

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