Chapin's Dougherty said he's not hearing from individual investors clamoring to get into the market right now.

"They are still cautious," he said. "They will believe what they see if they see some sustained positive action."

Dougherty is optimistic that can happen, predicting that the Dow could reach 20,000 by the 2016 presidential election.

But others are wary.

Christopher Parr, president of Parr Financial Solutions in Columbia, said Wall Street has gotten ahead of the game.

Sure, there are positive signs, Parr said, but the economy's annual growth rate will be cut by at least half a percentage point once the sequester cuts are in force. That's significant, given the current modest growth rate, he said.

"I'm more worried about: Is this the time to dump fresh money into the market?" he said.

Lyle Benson, president of L.K. Benson & Co. in Towson, said a few of his clients are pulling some money out of the stock market to build up their cash reserves.

Many investors are dangerously overconfident that nothing bad can happen while the Fed maintains its current course, said John P. Hussman, head of the Hussman Funds in Ellicott City.

"At least for now, it encourages them to ignore other economic factors and concerns," he said.

If the government makes inroads in deficit reduction and consumers start saving more, corporate profits and margins will shrink, and today's stock prices will seem excessive, Hussman said.

Hardesty, though, contends that stocks are undervalued now. But he said the time to worry will be when latecomers flood into the stock market, pushing the Dow above 16,000.

"I get nervous at 16,000," he said.

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