Looking ahead, the negatives we face in 2012 already include the end of the Fed's Operation Twist stimulus program, rising oil prices, China's slowdown, the European recession, the election uncertainty and anticipation of the 2013 budget bombshell of tax hikes and spending cuts. However, there are some positives this year that may help offset some of the negatives making for a potential decline that may be less steep than those of the past two years.

First, central banks are now cutting rather than hiking rates, which should help to temper global recession fears evident during the past two years' spring slides.

Second, housing is showing signs of improvement as both new and existing home sales are rising at about a 10% pace.

Third, while energy prices are up this year (same as last year) food prices are decelerating, which helps to explain why consumer sentiment is going up in the face of higher gasoline prices.

Finally, auto production schedules are robust for the next quarter and likely to support manufacturing activity, which had fallen in May through July of the past two years and contributed to the market decline.

Given this year's double-digit gains and the possibility of another spring slide for the stock market, investors may want to watch these indicators closely for signs of a pullback despite the current upward momentum in the stock market and solid economic growth.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Jeffrey is Chief Market Strategist and Executive Vice President at LPL Financial.

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