Last week stocks retreated another 2%, when the inflation figures came out a little higher than expected, raising fears that the Fed won’t stop raising interest rates. But don’t panic. We don’t think the market has peaked.

Two weeks ago, almost all the averages made new highs – transportation, financials, unweighted averages, everything. And while that sounds “peaky” to the untrained, we cannot recall an instance where such a convergence has coincided with a major market peak. A setback perhaps is in order – 6% or 7% -- but not likely a peak.

This means that while stocks over the next week or two could fall another few percent, there should be further gains before long. If we had to suggest a likely scenario (and you must remember that the most likely scenarios seldom unfold exactly as expected), we could easily envision the Dow making an all-time high in the near future – somewhere in the neighborhood of 12,000.

Things couldn’t look rosier for stocks these days. Virtually every index we follow is making highs – either recovery highs or in some cases all-time highs. Even utilities had a nice move last week, and are close to a recovery high. Financials too are doing well. The S&P is at a recovery high of 1325, and the Dow, at 11,577, has passed its 2000 high.

Strong too are most of the commodities. The CRB index has made historical highs. Copper prices are soaring. So are aluminum and silver. In fact, no one seems to be in the mood to sell anything these days. Least of all the market specialists who are still declining to go short. And when specialists don’t short, it’s because there are no sell orders.

Well, if the smart money can’t find any reason to sell stocks at these prices, who are we to argue? Growth too is certainly a powerful tonic for stocks, so as long as the economy is growing, we’re comfortable owning stocks.