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It's all relative.

You might think that because the Dow Jones Industrial Average ended Tuesday at an all-time high of 26,773.94 stocks are due for a pullback. 

While gains this year have been strong, the market hasn't returned the more than 20% it returned in 2017 (mind you, we still have three months to go in 2018). The Dow has risen 8.31% this year, the S&P 500 has gained 9.34%, and the Nasdaq has surged 15.88%. The historical average annual return for stocks in the U.S. is about 10%, not adjusted for inflation. Meanwhile, the S&P 500's trailing 12-months price-to-earnings ratio is around 25, slightly above its historical average.

Simply put, the market hasn't performed overwhelmingly in 2018.

GDP was strong in the latest reading, showing a 4.2% growth rate. Some of my sources warned that that's a peak for the U.S. economy, while others said it indicates we're in the middle of robust growth mode. Both inflation and wages have showed up in the second half of the year as well, indicating a strong consumer, and quite possibly a strong consumer for the near future.

Federal Reserve Chairman Jerome Powell feels the economy still has legs to keep running. The U.S. economic outlook is "remarkably positive," in Powell's words, due in part to the "historically rare" combination of low unemployment and rather tame inflation.

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So let's go sector by sector. Oil-focused energy companies look poised for gains as crude prices could continue to rise due to somewhat restricted supply, while demand improves. Some of my sources have made that argument, an argument I agree with. "With oil prices rebounding significantly since a few years ago, coupled with somewhat constrained supply - I think that bodes well for the sector," E*Trade's VP of Investment Strategy Mike Loewengart told me. 

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While some of my sources told me  financials don't look great because rising interest rates could cause loan volumes to decrease, the opposite could very well be true. Net interest margins are set to expand, while wage growth provides a good backdrop for loan volumes.

Manufacturing looks strong as durable goods orders from manufacturing companies rose 4.5% year over year in August. Those companies -- like Boeing  (BA) - Get Boeing Company Report  -- must be anticipating strong demand downstream to the consumer in the supply chain.

Discretionary stocks look good too, as a result of the wage increases, and most people I spoke to agreed. Starbucks (SBUX) - Get Starbucks Corporation Report has been a stock I've been watching. As another one of my sources pointed out recently, whenever wage and employment data are strong, discretionaries do well.

"Consumer discretionary continues to enjoy growth as employment continues to be strong," said Chris Wolfe, chief investment officer of First Republic Wealth Management.

High-performing large-cap stocks also have led the way this year. Apple (AAPL) - Get Apple Inc. (AAPL) Report  has returned 33% this year, Amazon (AMZN) - Get, Inc. Report  has gained about 65% this year, and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report  has jumped about 34%. Evidence points to further gains for these tech giants.  

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