"The end game for this bullish phase [on stock markets] needs to be considered well before the event. While the timing is largely guesswork at this stage, the usual causes are not. Bull markets are usually assassinated by tighter monetary policy," said David Fuller (Fullermoney) from across the pond.

"A good, although not precise, indicator of bear market risk will be provided by the yield curve, currently showing the premium of US 10-year over 2-year government yields. Years often go by before this chart shows anything important but it should not be forgotten by any of us. When this next approaches 0.0, we should have at least trailing stops, mental or actual, for all of our equity long positions. When it inverts to negative, indicating that 2-year rates are higher than 10-year rates, and the longer it stays negative, the more we should assume that a bear market is approaching.

Source: Fullermoney.com

The good news today, is that the next inverted yield curve is probably a while away. Consequently, it would most likely take a true "black swan" to derail the current bull market anytime soon. These are unpredictable by definition so I would not worry about them without evidence of a game-changing event," said Fuller.

The chart below shows the long-term trend of the S&P 500 Index (green line) together with a simple 12-month rate of change (ROC) indicator (red line). Although monthly indicators are of little help when it comes to market timing, they do come in handy for defining the primary trend. An ROC line below zero depicts bear trends as experienced in 1990, 1994, 2000 to 2003, and in 2007. And 2011? With the ROC fairly comfortably above the zero line, the primary bullish trend remains intact.

Source: StockCharts.com

Having said the above, a short-term correction could happen at any time in the light of the overbought charts and stretched fundamentals.

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