The stock market charge continues. The S&P 500 has now doubled from its lows set in March of 2009 and we have witnessed the biggest stock-market rally since 1936.The recent quarter also looks very encouraging. More US companies are exceeding sales forecasts than in any time in four years. In fact, 71 percent of S&P 500 Index companies have reported revenue in excess of estimates and beaten bottom line estimates 69 percent of the time.Can this surge continue? There are actually three great reasons why it can:l Continued Economic Growth. January US manufacturing accelerated at the fastest pace since May of 2004. For years many were calling for the end of manufacturing in the US yet this simply has not been the case. Although the economy may not be booming it has appeared to have turned the corner and is exhibiting slow but stable growth. Employment seems to be turning and consumption has stabilised.l Earnings Growth. If we don’t believe the average economist estimate for 3.2 percent growth this year, let us just assume a 2.75 percent growth in GDP for the US. Remember that sales growth is in nominal terms so assuming we have an inflation number of about two this year, we can therefore assume sales growth of about five percent. If one was more aggressive, however, you would need to account for the fact that nearly a quarter of S&P 500 earnings come from emerging markets which may exhibit nominal growth of nearly 10 percent this year. In this case revenue growth may be even higher for multi-national companies. Earnings should easily outpace revenue gains because of the large amount of operating leverage in American companies. This leverage has developed over the last few years because the US actually uses a great deal of equipment and software in their production and distribution processes. This, of course, works both ways. In 2008, for example, S&P earnings plunged 30 percent on a smaller 14 percent decline in sales. Much of this leverage ramp has happened over the last couple years in a positive way. It is not unrealistic, however, to expect 10-12 percent earnings growth from a revenue growth level of about five percent. This is actually rather conservative and is less than a half of the leverage from last year.l Valuation. With about 417 companies reported so far this year or about 91 percent of the S&P 500, the 2010 year looks like we could see annualised earnings of about $90. This gives the S&P 500 a trailing price to earnings multiple of 14.9 times. Assuming we see 10 to 12 percent earnings growth in 2011, we are trading at about 13.4 times forward earnings. This is not that demanding of a multiple given the long run average of about 16 times. In fact the price gains of the last 12 months have actually lagged the earnings growth and helped to compress the price earnings ratio.To be fair, there are still a number of issues to be concerned about and require monitoring (e.g.. sovereign debt, municipal debt, required deleveraging, unrest in the Middle East, and inflation pressures/higher interest rates in the years ahead).A correction at some point is likely and would not be surprising. Furthermore, investor bullishness is at an extreme. The recent Bank of America/Merrill Lynch February Fund Manager Survey was one of the most bullish in years and the Ned Davis Crowd Sentiment Poll has readings of extreme optimism.These excessive bullish feelings tend to offer a contrary indicator but from our research we have noted that the bullish readings tend to be poor timing mechanisms for calling a top but bearish readings are rather good at calling a bottom.Often the strongest surge in the market comes with the maturing of the rally and the final movement of an index will mainly come from the very large-cap stocks. Since they have not really been driving the market up to now, you could see indices moving sharply ahead simply because of the large cap effect.One group that looks especially attractive at this juncture is the large multi-national technology companies. They offer a very compelling risk reward at this stage with many names trading at eight times earnings after deducting net cash. They have solid and strengthening balance sheets, double digit earnings growth and global exposure.One other item to note is that the “retail” investor has now finally seemed to notice the run in the equity market after two years of impressive gains. US stock funds posted a nearly $16 billion inflow in January, the highest level since February 2006. This has helped reverse eight consecutive outflows and looks to be the start of future funding that may help support future gains.This bull may be just beginning its charge.Nathan Kowalski is the chief financial officer at Anchor Investment Management. He holds a Chartered Financial Analyst (CFA) designation and Chartered Accountant (CA) designation.