Market Preview: Full Speed Ahead

NEW YORK (TheStreet) -- The bulls just keep getting more and more bullish.

As of Friday's close at 1369.63, the S&P 500 has surged 8.9% year to date, and it sits a little more than 14% below an all-time closing high of 1565.15 in October 2007. Retail investors would likely be ecstatic if the index made it that far, but Birinyi Associates is setting its sights even higher.

The independent investment firm said late this week it thinks the S&P 500 could reach 1700 this year, which would be a 19.4% advance from here.

"We have been pleasantly surprised by the gain year-to-date," Birinyi wrote. "Even more so by the structure and dynamic of the rally, as well as the fundamentals and sentiment now present. As a result, we are more optimistic than we were two months ago."

What's behind the firm's increased conviction? Well, for one, Birinyi is encouraged by the current rally's similarity to previous bull markets, especially 1982 and 1990, which both took off at this point in their histories.

"If -- if -- the market is right and the economy surprises us on the upside, gains similar to 1982 and 1990 are a distinct possibility and one which no one has entertained," Birinyi said. "It has been suggested, that the 2012 rally is reminiscent of 2011 and this too shall pass. Perhaps but we are impressed by the nature of the rally as it has been led by economically sensitive stocks and groups."

The firm went on to note the strength of the energy equipment, building products, construction materials, machinery and semiconductor sectors, listing individual names like Caterpillar (CAT), up 24% year to date; Cummins (CMI), rising 36%; General Motors (GM), surging 30.5%; Dow Chemical (DOW), gaining 19%; and Salesforce.com (CRM), soaring 42%.

Birinyi also pointed out the sluggishness in defensive sectors like consumer staples and pharmaceuticals bodes well for the rest of 2012, citing the lack of participation from stalwarts like Coca-Cola (KO), down 1.1% year to date; Procter & Gamble (PG), off 0.6%; McDonalds (MCD), slipping 0.8%; Pfizer (PFE), sliding 1.1%; and Johnson & Johnson (JNJ), down 1.2%.

If these names start to pick up the slack from the year-to-date market leaders, which include the likes of Bank of America (BAC), Netflix (NFLX) and Sears Holdings (SHLD), that should provide the necessary oomph for the market to move another leg higher.

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