Is Market's Summer Run-up Over?

All media outlets seem to have an opinion on whether the summer bull run is over or will keep the momentum going. Majority seems to be under the opinion that this sharp run-up must result in a sharp pullback. I find this to be a pretty useful piece of information simply because conventional thinking and magazine covers generally tend to be wrong, at least as far as the timing goes. I agree that a pullback is all but inevitable, but I'm not convinced that it will happen as soon as a lot of the pundits and apparently many of the retail investors (more on this in a moment) expect it to occur. For one, earnings season is not over, and there are likely to be more good earning news coming out in the next few weeks than bad news. Most of the earning improvements though are a result of either government stimulus favorably affecting particular industries or analysts' "consensus" earnings estimates being affected by the "bear" bias. Analysts tend to have overly bullish expectations in the bull markets and likewise overly bearish expectations in the bear markets. Therefore it's easier to beat the estimates they made after several horrible quarters. I would expect a whole lot more earnings misses in the third and fourth quarters due to the undue optimism that seems to be clouding the market nowadays.

So, confirming my sense of public wrongness about the market, Schaeffer's Investment Research pointed out a similar sentiment in the "Monday Morning Outlook" commentary:

"Moreover, retail investors are getting more comfortable with the market's outlook, and they have tended to be very reactive and wrong at key points throughout 2009. For example, according to the latest American Association of Individual Investors weekly survey, nearly 48% of investors are bullish. This is the highest percentage of bulls since June 4, which preceded a mild pullback in the SPX during the course of the following month. For what it is worth, only 28% of those surveyed were bullish ahead of the SPX's breakout two weeks ago."

Additionally, professional investors seem to be off the mark as well:

"...a recent survey of 127 institutional investors by TheMarkets.com revealed, "Surveyed investors expect that key sectors of focus over the next 12 months will be energy, financials, healthcare and basic materials." We find it extremely odd that technology was not listed among those key sectors, especially given QQQQ's strong technical performance in 2009."

Once again, I agree with the Schaeffer's analysts, since technology has already shown resilience and it's one of the most concentrated sectors innovation-wise and I think previous recessions have shown that the most innovative companies rebound the strongest as the economy picks up. This is not to say that the aforementioned sectors (energy, financials, etc.) will necessarily lag technology, but at the very least technology sector should be right there with them.