"When we do get that eventual decline, and it will come, it will most likely be a pullback rather than a correction or a new bear market," says Sam Stovall, chief equity strategist at S&P Capital IQ, in the attached video.
For clarity's sake he characterizes a pullback as a 5% to 9.9% decline, a correction as a 10% to 19.9% retreat, and a bear market as anything worse than 20%.
Here are some wild stats about the current rally in the S&P 500 in 2013 which brings the gains to 17%+:
The Conference Board Leading Economic Index (LEI) for April was released this morning. The index rose 0.6 percent to 95.0 (2004 = 100), a welcome improvement over the -0.2 percent last month, which was a downward revision from -0.1 percent. The Briefing.com consensus was for a 0.3 percent increase. Today's press release highlights a "continuing economic expansion with some upside potential."
It was the fourth straight record close for the S&P 500. Both the Dow and the S&P 500 hit intraday record highs as well.
US equity valuations are currently not symptomatic of a stock market bubble. However, with frenetically rising stock prices in the face of simultaneously deteriorating macro and micro fundamentals, two questions are begged: First, what is driving the rise in stock prices represented in broad indices such as the S&P 500, Dow Jones Industrial Average and Nasdaq? It is clearly not the recent evolution of fundamentals in the form of macroeconomic and corporate earnings forecasts. Second, how sustainable is the current rally and how far can it go?