The market rally is getting very very sleepy

The bull has been raging on Wall Street in 2012. But it might be time for him to lie down and take a nap.

NEW YORK (CNNMoney) -- Stocks had one of their worst days of the year Wednesday as Greece reminded everyone that it is still Greece. The Dow narrowly steered clear of its first triple-digit point drop since December 28.

The jitters didn't last long though. The market rebounded Thursday despite renewed Greece concerns and a fourth-quarter earnings miss from General Motors (GM, Fortune 500).

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But guess what? There will be more days like yesterday. In fact, the Dow will eventually need to fall more than 100 points and the S&P 500 will drop more than 1%. When they do, it will be healthy. And long overdue.

Even with Wednesday's drop, the S&P 500 is still up nearly 7% already this year. Stocks can't (and shouldn't) go up every day. And they can't sustain this pace of gains for a full year. The market needs time to, in the immortal words of Frankie Goes to Hollywood, relax.

Consider this fun but somewhat scary fact. There are more companies in the S&P 500 that are already up at least 15% this year (118) than there are stocks in that index which are down for the year (113).

Have big bank stocks finally turned a corner?

And when you look at the biggest gainers in the blue chip index, it smacks of speculative froth. For all the haranguing about Apple's "parabolic" rise to $500 and what that means for the market, Apple (AAPL, Fortune 500) was actually just the 50th-best performer in the S&P 500 this year through Wednesday.

Apple, as I argued Tuesday, is still cheap. But there are plenty of market "leaders" this year that may simply be getting the proverbial dead cat bounce after a miserable 2011.

The best performer in the S&P 500 so far in 2012 is Netflix (NFLX), which is expected to lose money this year. It's up 76%. Sears (SHLD, Fortune 500), which is either in danger of bankruptcy or getting saved through a leveraged buyout, depending on which way the market winds are blowing, has soared 66%.

The list goes on. Homebuilder PulteGroup (PHM, Fortune 500) is on fire. Bank of America (BAC, Fortune 500), the top performer in the Dow, is leading a rally for other financials that still look very risky.

Heck, Dell (DELL, Fortune 500) has even outperformed Apple this year, albeit by the tiniest of fractions. But seriously. Is there anyone who would rather own Dell than Apple for the long haul? Maybe in 1996.

There are too many risks that remain to justify a rally of this magnitude over the course of an entire year. I think it would be a mistake to declare that the big moves up in January and the first half of February mean it's now safe to invest in banks and tech stocks trading at crazy valuations.

Paul Nolte, managing director with Dearborn Partners in Chicago, said stocks are due for a pause for a variety of reasons.

Chief among the fears? Europe, of course. But there are also continued worries about the U.S. deficit. And there are questions about whether the Federal Reserve will really launch a third round of bond buying, which traders have already dubbed QE3, after its current program of swapping short-term bonds for longer-term ones (Operation Twist) ends in June.

My big fat Greek speculative rally

Nolte said he's not sure yet if stocks will actually experience a textbook correction, i.e. a 10% drop from recent highs. If the news gets worse in Europe, the U.S. economic recovery stalls or the Fed signals it's less willing to keep printing money to buy bonds, that could trigger a big downward move ... at least for a short period of time.

This doesn't mean that the market is doomed to give up all its gains though. 2012 could (and should) still be a pretty strong year for the market. Brad Sorensen, director of market and sector research for Charles Schwab in Denver, said the problem with stocks last year was that investors were too bearish.

"This rally is not about irrational enthusiasm as much it is getting rid of irrational fear," he said.

Still, don't get your hopes up for a late-1990s styled market pop either.

"There will be more bumps in the road. The whole year is not going to be as smooth as the first six weeks have," Sorensen said.

Best of StockTwits: Call it Government Motors if you want. But GM today stands for Great Move. It was up more than 6.5% in midday trading as investors focused on the strong overall 2011 results as opposed to the small fourth-quarter miss. Still, some are skeptical.

JeffReevesIP: So $GM makes over $7 billion in 2011 profits. In December, auto czar estimated taxpayers will LOSE $14 billion on bailouts... Seems fair.

TommyThornton: $GM pension remains under funded by $24.5b - "What's good for GM is good for the country" - not quite.

PropDeskJunkie: $GM ... ever perform a full-power stall? thats GM right here i'm afraid..should have dumped Opel, trimmed more brands, not give IPO to Union

Some good points in all three of those tweets. Yes, taxpayers aren't profiting from the bailout yet. Yes, the pension is still a concern. And yes, GM arguably could have taken even bolder steps during its bankruptcy reorganization.

But let's not nitpick so much that we lose sight of the fact that GM is now much healthier than even the most optimistic of auto experts expected back in 2009.

TheSlayer: Once upon a time, a $GM miss would have sent the market tumbling. Maybe still in combination with week initial claims numbers?

Exactly. The latest drop in jobless claims is another piece of evidence that supports the notion of a slowly improving economy. And what's good for U.S. consumers is good for GM.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.