1) Stock prices relative to earnings are above long-term averages
2) A historically large portion of the money currently invested in the stock market is borrowed. Margin debt on the NYSE is near an all time high. "The exuberant mood comes as margin debt on Wall Street hovers near $377bn, just below its all-time high and well above peaks before the dotcom crash and the Lehman crisis. By Ambrose Evans-Pritchard, The Telegraph
3) The US Federal Reserve's POMO operation has been propping up the stock market. Since January 2009 the US Fed has purchased over $5B of stocks during each of 159 weeks. Most of the gain in the S&P since January 2009 were during these same weeks.
From Zerohedge, "between January 2009 and April 2013, on days in which the Fed POMO was more than $5 billion, the stock market rose a total of 570 points, on days in which the POMO was less than $5 billion, the cumulative stock market gain was "only" 141 points, and when there was no POMO, the S&P gained... -51 points".
The US Fed's POMO operation is confusing because of the jargon and its audacity. Simply put the US government has been purchasing stocks. But, how can that be? I thought the US was in debt? The US is borrowing more money to finance these stock purchases. I suspect that these borrowings do not add to the US reported net debt, because stocks are included as an asset that offsets debt when calculating net debt. If the stocks gain value they would decrease the US net debt.
Other central banks are also investing their governments money in equities.
Some day the governments will no longer be able or willing to invest in equities, which will depress the markets.
The market may not decline just because it is over valued today. It may even appreciate for several years. How many years did internet stocks appreciate before crashing in 2000? It is tough to stay on the sidelines "while everyone else repeats history". A lot of money can be made joining the irrational exuberance. And, it can be lost very quickly, so be careful.