As we set our clocks forward in time for spring, the US stock market has continued its own march forward, with the S&P 500 just points away from the all-time high of 1,565 hit back in October 2007.

Even with dividends reinvested, the S&P 500 didn’t quite keep pace with inflation the past 13 years, causing some investors to call this a “lost decade” for US stocks. So when the S&P 500 finally moves past 1,600, we will be entering into new and very much welcome territory.

The going is likely to be a bit bumpy, though, since the US economic recovery is still quite fragile. For example, the S&P 500 recently dropped almost 3 percent in one week after Wal-Mart Stores (NYSE: WMT) reported lower-than-expected February sales, and the Fed was shown to be questioning its current easy-money policy.

But retailers other than Wal-Mart reported in line with expectations, leading to sighs of relief. The takeaway: Higher payroll taxes are affecting mostly lower-income Americans, Wal-Mart’s key customers.

The good news is that US unemployment is now down to 7.8 percent, where it was in December 2008. And the housing market continues improving, helped along by more new funds set up just to buy vacant real estate. While the construction industry isn’t starting quite as many new homes as it did last year, it’s still building at a decent clip. And this, in turn, is driving furniture sales and helping companies such as Leggett & Platt (NYSE: LEG), which we profiled in our February issue.

Bumps in the Road

While I remain cautiously optimistic, I can’t help but expect a correction sometime soon.

The stock market’s trading volume remains relatively low, and it’s estimated that as much as 80 percent of recent transactions can be attributed to high-frequency traders. This is not a very encouraging sign, considering that spring is typically a time of rising volumes and prices.

And let’s not forget Congress. While Congressional Republicans opted not to block the most recent debt-ceiling increase, Washington continues to wrestle with the federal budget cuts due to sequestration. Although the near-term effects on the economy aren’t likely to be crippling, the rhetoric and media coverage could actually hurt consumer sentiment.

So our best advice continues to be: Pay attention to your portfolio allocations and make sure your investments aren’t highly concentrated. It also pays to focus on both growth and high-quality earnings—consistent, trustworthy, and non-gimmicky.

Finally, consider opportunities in foreign markets, where the politics are calmer and the economies are getting stronger, such as in Chile, which we cover in this issue’s “Market Monitor.”