February’s sharp month-end selloff lasted all of four days. The major averages bounced off their 50-day moving averages and have gone out to new highs. According to many of the pundits this wasn’t supposed to be happening. What’s behind it?

In a nutshell: new and encouraging economic data driving an uptick in 2013 earnings estimates, with the backdrop of a still-cheap market P/E multiple and a Fed that has signaled continued monetary accommodation.

The new and encouraging economic data I’m referring to are especially the two ISM reports issued last Friday and this morning. These are notable because, of all of the monthly economic data, the ISM’s purchasing managers surveys are probably the broadest and deepest in scope so provide a pretty good comprehensive snapshot of economic activity. Take a look.

The manufacturing survey at 54.2 is a strong number and its forward-looking new orders component surged to 57.8 – a very encouraging reading.

More broadly, as you can see in the Conference Board’s latest reading of coincident and leading economic indicators, both have turned markedly higher in the last six months.

Stocks will, no doubt, correct somewhere along the way with the S&P 500 having already achieved +8% of its +10% expected gain[1]  for 2013. However, it’s pretty clear from the data that the U.S.’s economic momentum is improving and stocks, in my opinion, have every reason to continue in the direction of the experts’ target – if not higher – over the remaining months of this year.

For a more thorough review and analysis of the latest economic and stock market data, please tune in to my monthly A4A webinar on Tuesday, March 12, at 4:00pm EST.

The non-manufacturing survey – which captures a much broader swath of the economy than does the manufacturing survey – also ticked higher to a very strong 56.0 and its forward-looking new orders component surged to 58.2.