Aug. 1--Doug Ramsey, research director at the Leuthold Group, had an assistant basketball coach in college who, even if the team was playing well, would wade in at halftime with an obscure statistic that would mystify the squad.

"Hondo is at it again," Ramsey said on Friday, at the conclusion of a month that saw 7.4 percent increases in the value of the Standard & Poor's 500 and the Bloomberg-Star Tribune index of Minnesota's 100 largest publicly traded companies. "But, evidently he's traded his clipboard for a laptop and economic data feed."

The data junkies seem to be going to greater and greater lengths to "discredit the improved tone of economic reports," Ramsey said. Wall Street's bears are still arguing about the statistics and seasonal normalizations behind improved housing, unemployment and economic output statistics.

But the prognosticators -- including the often-bearish crowd at Leuthold who told us during the bleakness of last winter that things would improve -- have been right so far about the direction of the stock market.

The Bloomberg-Star Tribune index is up 14.3 percent for the year, the Russell 2000 index of small companies is up 11.5 percent and the S&P 500 is up about 9.3 percent.

To be sure, the stock market still is down about 30 percent from its October 2007 peak, shortly before the global economy collapsed in a heap of debt and overheated housing prices. But the uptick is good news for long-term equity investors. And Ramsey and other strategists don't think the market's runup is over.

"I can't predict the short term," said Martha Pomerantz, a principal and portfolio manager at Lowry Hill Private Asset Management, who predicted in December that the S&P 500 would hit 1,050 in 2009. "I do think we would argue that many individual stocks are still inexpensive and we will have above-average compound growth over the next five years, even using modest earnings-growth expectations."

Here's why the optimism, assuming the economy continues to slowly recover:

The market is going up, yet investors are still cautious and there are trillions sitting in low-yield money market funds, yet to be committed to stocks. Those who commit only when the market rally is mature have yet to jump in.

Moreover, the S&P 500 is projected to earn an aggregate $55 per share in operating earnings this year and $75 in 2010. That means the S&P is trading around 13 times 2010 earnings, compared with a historic average of about 15 times.

"I'm encouraged that sentiment is still relatively bearish among investors," said David Joy, equity market strategist at Ameriprise Financial.