Market Preview: The Buy Signal

NEW YORK (TheStreet) -- The sellers took a breather on Tuesday, leaving nearly two-month old home price data as the most plausible reason for what amounts to a piddling gain.

Fact is the major U.S. equity indices are stuck in the mud right now with the catalysts that drove the rebound earlier in June either undone or off the table. Canaccord Genuity equity strategist Tony Dwyer said early Tuesday he's expecting to see a slow bottoming out over the next few weeks.

His reasons include stocks still being "slightly overbought" in the near-term when compared to intraday lows in early June, the unpredictable news flow from Europe, the imminent Supreme Court decision on Obamacare, and the risks that predominate during the pre-announcement period ahead of second-quarter reporting season.

At the same, Dwyer is sticking to an uber-bullish year-end 2012 target of 1575 for the S&P 500, arguing that fundamentals points of his positive thesis for the year "all remain constructive" despite the recent softness in the economic data and Europe's uncertainty. Among the planks of his platform are the facts that both corporate earnings and the economy are still growing -- albeit at a slower pace than before -- and a belief that the Federal Reserve should be "extremely accommodative" through mid-2013.

"Our 2012 S&P 500 (SPX) target remains 1575, based on 15x $105 in operating EPS," he wrote. "Until this past year, periods of sub-3% core inflation suggested the equity market should trade at a minimum 15 multiple. The 2011 European Debt Crisis and subsequent drop in global equity markets continues to price in a recession that we continue to believe remains highly unlikely -- even with renewed European Sovereign Debt fear."

Dwyer favors "additional equity commitments" in the financial, information technology, and industrials sectors while this near-term bottoming out process continues.

"In our view, outside of a geopolitical shock, the risk in such a bullish fundamental outlook is a rapid and sustainable rise in interest rates," he said. "At this juncture, there appears to be very little evidence of that happening, especially with long-term interest rates reaching into new low territory."