While mainstream analysis indicates that rising interest rates will hurt stocks, perhaps precipitating a correction or even a bear market, legendary investment manager Bill Miller thinks the opposite, CNBC reports. If the yield on the 10-year U.S. Treasury Note, which hit 2.55% on January 9, moves up to 3%, he believes that investors unhappy with capital losses on their bond fund holdings will shift to equity funds, as they did in 2013. "I think we could have the kind of melt-up we had in 2013, where we had the market go up 30%," he told CNBC. The founder of Miller Value Partners, Bill Miller, gained notoriety while beating the market for 15 consecutive years as a portfolio manager at Legg Mason, CNBC notes.

Increasing Euphoria

There are other indicators of increasing euphoria among market participants. For example, analysts are upgrading their corporate earnings estimates at the fastest pace in ten years. The last time they were so optimistic, the market swooned. (For more, see also: Wall Street's Exuberance May Signal Coming Bear Market.)

Another example is decreased hedging activity. After seeing equities rocket ahead in 2017, causing put options regularly to expire with no value, increasing numbers of individual investors and professional money managers are forgoing the cost of insuring their portfolios against downside risk. The upshot may be a steeper downturn once a selloff finally begins. (For more, see also: Profit-Hungry Investors Scrap Hedges As Stocks Soar.)

'Perfect Storm'

Rich Ross, head of technical analysis at Evercore ISI, sees a "perfect storm" building for more big equity gains in 2018, in an interview with CNBC. Finding strong indicators of "breakouts" underway among three sectors, he told CNBC: "If energy, financials and technology work together, we're halfway home [to new stock market highs]." Ross added, "And we haven't even talked about the breakouts in industrials and health care and materials...Very bullish." (For more, see also: How Apple, Amazon, Nvidia May Push Techs To New Highs.)

As January Goes

According to the so-called January barometer, if the S&P 500 Index (SPX) rises in that month, it also will rise for the remainder of the year. The S&P 500 has set new record closes in each of the first six trading days of 2018, as has the Nasdaq Composite Index (IXIC). This hasn't happened since 1964 for the S&P 500 or 1999 for the Nasdaq, CNBC reports in another story, citing research by Ryan Detrick, senior market strategist at LPL Financial. The string was broken on the seventh trading day, January 10, when both indices declined.

Detrick finds that, when the first five trading days of a year are up by 2% or more, the market has been up for the full year 15 out of 15 times, with an average gain of 18.6%, per CNBC. He calls this "just one more sign this could be a double-digit equity return year for investors." During those first five trading days of 2018, the last of which was January 8, the S&P 500 gained 2.8%, the Nasdaq Composite rose 3.7%, and the Dow Jones Industrial Average (DJIA) advanced 2.3%.

What Goes Up

But what goes up eventually comes down, at least temporarily. After being fast out of the gate in 1999, the Nasdaq Composite soared a stunning 85% for the full year in 1999, before crashing, CNBC adds. In the subsequent dotcom crash of 2000-02, the Nasdaq plummeted 78%.

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