Jobs Report to Test Bulls in Coming Week

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NEW YORK ( TheStreet) -- The second quarter of 2012 has a lot to live up to but investors can take some solace in the fact that it's got history on its side.

Research firm Birinyi Associates noted earlier this week that the S&P 500 , which finished the first quarter up 12%, usually books a respectable gain in the quarter following 10%-plus rise in the previous three-month period. According to Birinyi, the index has tacked on an average of 5.2% in the quarter following a 10%-plus gain and finished positive 88% of the time since 1962.

If said 10%-plus gain comes in the first quarter, the S&P 500 has averaged a 3.4% advance and been up 86% of the time.

"We are frequently asked what is 'going to be different,' or for 'themes' in the next month, quarter, year etc.," Birinyi said. "Our response has always been that the market pays no attention to the calendar, rather moves in cycles. With that being said, we expect more of the same as we start the second quarter."

Michael Gayed, chief investment strategist at Pension Partners, also feels bullish about the coming quarter. He cites narrowing credit spreads as evidence of tremendous market resilience despite Greece effectively defaulting, slow growth in Europe, and fears over a China slowdown.

"Financials continue to lead markets higher, indicative of growing investor confidence that the financial crisis worldwide is nearing its end," says Gayed.

The most important thing to pay attention to going into the next quarter is fund flows, to see if the "Spring Switch" out of risk-free assets into riskier assets occurs, says Gayed.

Ken Shreve, a RealMoney contributor and financial markets commentator, says that after the big run-up for the market, he's been playing more defensively than offensively. While he's not looking to add new names to his model growth portfolio, he's also willing to let what he owns right now continue working.

"Until I start to see meaningful signs of institutional selling in some of the big leaders -- a name like Apple(AAPL) for instance -- I'm in no rush to head for the sidelines."

Right now, Shreve is getting mixed signals on underlying market health. Heading into Friday, the broad-based New York Stock Exchange Composite Index showed seven higher-volume declines in recent weeks, which points toward at least some institutional selling, he says. There have been five events of higher-volume selling in the S&P 500 and four in the Nasdaq, he says.

"There is still a bid underneath this market as under-invested fund managers continue to put money to work," Shreve explains.

If the major averages do eventually start to pull back, Shreve is not expecting the selling to be long and drawn out. At this point, a pullback of 5% to 7% from recent highs seems reasonable, according to Shreve.