The remainder of 2013 should be coming up roses for investors, with favorable shopping and calendar trends, and a Federal Reserve posture that is distinctly unthreatening, according to Jeffrey Kleintop, chief market strategist at LPL Financial.

The National Retail Federation projects 2013 holiday sales will rise 3.9 percent this year, although at least two discount retailers catering to lower-income shoppers, Wal-Mart and Kohl's, are predicting a weak season.

But Kleintop says holiday sales prospects are brighter than that, partly due to the "wealth effect."

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

"History shows that this year's gain for the S&P 500 suggests a high-single-digit gain for retail sales," he wrote in his weekly market commentary. "When people feel wealthier, they tend to spend more. Adding to this wealth effect, home prices are up double digits too."

He noted some Americans also have more discretionary income than they did in 2012, since gasoline prices have declined as much as 10 percent and 1.3 million more people have full-time jobs, according to government data.

Kleintop predicted there will be less tax-loss selling this year because of rich stock market gains, and that the consumer discretionary sector could also help lead the year-end market higher.

As for the Dec. 17 and 18 Fed meeting that some investors are wary of, lest the Fed pulls back on its massive quantitative easing (QE) stimulus program, Kleintop is not very concerned with that possibility.

He forecast the likelihood of a sharp rise in bond yields before year-end, which could produce a corresponding plunge in stocks, is slim.

"A strong close to a strong year may be in store for stocks," Kleintop wrote. "A pass on tapering by the Fed may boost stocks headed into year-end, meaning the S&P 500 finishes the year with a "Santa Claus rally — the tendency for the stock market to post gains between Christmas and New Year’s Day, a period that has averaged a 1.5 percent return since World War II."

In an interview with Yahoo, Kleintop said lush stock gains this year may encourage investors to pile even more heavily into equities, regardless of higher valuations.

"Decades of research into behavioral analysis suggests that people chase returns," he said. "They don't get ahead of them, they get behind them."

Kleintop noted major stock averages are now showing double-digit returns for one-year, three-year and five-year periods, which will entice investors further.

"Investors are worried they're missing out and they're finally moving in en masse. The individual investor has trillions of dollars that they could move into this market and they're just starting to do it."

Kleintop's time horizon is downright exuberant — he told Yahoo the bull market could extend into 2017.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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