Barry Ritholtz of FusionIQ and The Big Picture blog says he expects the market rally to continue into the first quarter of 2011, though he sees risks accumulating over the course of the year.

“I see no reason why the rally should not continue into the first quarter of 2011,” Ritholtz writes on his blog. “Markets are over bought, but can remain that way — persistently overbought — for quite some time.” He says that the individual investor has been “MIA” during the market’s turnaround over the past 22 months, but may “get taunted in if the markets keep rising.”

On the positive side, Ritholtz says corporate profits are strong, the economy is “grudgingly” improving, and the Presidential cycle bodes well for the market.

But on the negative side, he says that sentiment is “frothy”, and that broad consensus that the market will gain — which is in place now — “always makes me nervous.”

Ritholtz also says that the government has been the big driver of growth, and that organic growth — which is in short supply — is needed to keep the recovery going. The state of residential real estate, banks’ balance sheets, and state and local governments are also cause for concern, he says.

Still, Ritholtz seems optimistic the rally will continue for a while. But in closing, he also offers something of a warning: “History teaches us that when markets collapse 50% or more, they have strong snapback rallies that typically last 12-30 months, with the median around 17 months. That ends with a 25% correction, which we have yet to see as we begin the 23rd month following the March 2009 lows . . . “