Warren Buffet's favorite stock market indicator is the entire stock market valuation divided by GDP. A higher number means stock market prices are higher relative to the total gross domestic product.
Right now, the indicator is reaching rarefied territory of about 2.2 standard deviations above the mean value -- meaning that stocks are reaching valuations that have occurred only about 2% of the time in the past 60 years. In other words, stock prices have been lower 98% of the time in the past 6 decades (and probably extending all the way to 1929). Only at the peak of the Dot Com super bubble was the indicator higher. The implication is that the Federal Reserve has created a near super bubble.
Greenspan helped create the super bubble of year 2000. Bernanke has intentionally engineered our current bubble. Booms and Busts Created By the Federal Reserve.
Also see my blog entitled The Stock Market is Probably Near a Peak.
Here's the chart from Doug Short:
The moral of the story is that if you're holding on to equities here after a 5 year bull run, prices have rarely been higher. Stock prices have been lower 98% of the time in the past 6 decades. It is not a favorable risk-reward ratio!!