The stock market’s been on a tear this year, up 7% year to date. Yes the market’s still undervalued by 20% or more, but the Overbought Oversold Oscillator says we are due for a rest.

The stock market (measured by the S&P 500) rose 4% last month, hitting levels not seen since July of last year. P/E ratios rose last month — a sign of good things to come.

The bottom line is the stock market is selling 23-24% below where it should be — and setting up nicely to break out — so we could be in for a solid Santa Clause rally. Merry Christmas!

The recent tape action shows the market could still go lower, but with the market selling at around 10 times earnings, this is an opportunistic time to buy if you’re a Warren Buffett mini-me.

Since March we’ve been used to the Dow around 12,500. But that changed in August as the market lost 15% of that number. I knew the market would bounce back quick, because the Oscillator told me.

Earnings season has been going on all month. Most companies are coing in with great news and profits. The bad news is political. Stay out of it. Stay in the market.

Going into the second half of 2011, the stock market’s not only inexpensive, but growing well too. I see good things ahead for the rest of the year, here’s why.