On the other hand, research has shown that retention increases the likelihood that a child will drop out of school when she reaches the legal age to do so. You don't want to set your daughter up for failure.
Talk with the school counselor. He may be able to observe your daughter in the classroom and give you an objective opinion of her readiness to move on. The counselor can also tell you about any screening tests that the school can give to determine your daughter's readiness for second grade.
You may also want to talk with some of the second-grade teachers. Describe your daughter to them and ask what their experience has been with children in similar situations. Observe their classrooms; even though the children there now are a year older than your daughter, you can get a good idea of what is expected of second-graders and whether or not your daughter is ready for that.