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The Bull Market Isn't in Danger of Ending Yet

The stock market is on fire. In the first two weeks of the year, Standard & Poor's 500-stock index rose 4.3%. That's almost half an average year's advance in the index in just nine trading days, and it brings its 12-month gain to a sizzling 24.9%.

Is the market likely to go higher or are we near the end? No one can say for sure, but I don't think we're on the verge of another awful bear market—at least not right away. But watch this ongoing stock market melt-up carefully. It could very well be followed by a painful meltdown.

The S&P 500 currently trades at 20.5 times the consensus of analysts' estimated earnings for the coming 12 months. That's higher than any price-earnings ratio since World War II except for the 1990s, when the S&P's P/E approached 30.

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