It looks like we're in for another tepid day in stocks today. Have the summer doldrums set in? Should we take the rest of the summer off and relax? Where is the market headed now?

If I knew do you think I'd tell you? I don't, of course; but I have my ideas. If you'd care to hear them then read on.

The case for continuing momentum
Here we are 5 solid years into a bull market. We've had rapidly expanding corporate profits in the most recent three years and they're expected to remain strong well into next year. Yet Price-Earnings ratios aren't out of line. The P/E for the S&P 500 stands at 17, fully 3 points below the 25-year average of 20. I think most stocks are still relatively inexpensive.

Investment remains strong
The pace of acquisitions is showing no signs of letting up soon. Already this year more $20 billion-plus deals have been announced than you can count on one hand. And more are in the works. An old idea is once again new and hot - LBO's are back in fashion. The rapid pace of mergers and acquisitions, whether public or private, tends to create a fertile environment for stock prices to grow. Big money is investing, but not at a feverish pace that makes you wonder what they know that we don't. I think we know what they know; but they have the means to buy the whole company, rather than a few hundred shares.

The bad news isn't spreading
Anyone invested in the automotive or real estate sectors? I feel your pain. I'm not an automotive sector investor, but I do believe it's wise to have some of my portfolio invested in real estate. The housing market began to cool and deflate about a year ago and I've been a net investor since that time. It's been painful seeing that corner of my portfolio painted red; but the red isn't spreading to other corners. Weak sectors in this market are like people taking sick days and staying home to get well rather than coming to work and spreading the disease around. To me this contained weakness is a sign of strength and faith in the market's prospects.

I'm an optimist at heart and I know it. That's why I try to temper my natural inclination to always go "all in" with as many skeptical thoughts as I can come up with. I can think of a few right now, and that's going to keep me from making any bold moves right now. But factoring everything into the equation, I still see plenty of opportunity in the future for stocks.