Although there's no doubt of a bullish phase in the US stock markets since 2002-2003, many writers have recently revived the idea that it has been a rather tepid bull and is therefore doomed to failure with a resumption of a secular bear market. The secular bear is said to have started somewhere between 1997 and 2001. Truly the bull has been tepid for long periods of time, at least for large indexes.
StockCharts's Bullish Percentage of SPX stocks demonstrates breadth by individual stock bullish breakouts from point and figure charts as a percent of the 500 SPX stocks. The current weekly version shows the long consolidation or rest from early 2004 to the summer of 2006. The brisk move in BPSPX from the July 2006 has itself made a break of the trendline down from 2004.
The second chart shows the SPX itself with an Elliottt wave labeling of that period from 2004-2006 as a three wave correction. The completed portion is shown as 1 and 2 to this past July, but could be considered to be A and B. The two charts make a convincing argument for a continuing bull market. None of this says there couldn't be a pullback at any time, but a longer bullish phase seems likely.
A market that is floating up is normally not considered exuberant even if making new highs. The 2CS (5 day total of daily VXO * CBOE p/c) is 41.75 tonight. 2CS got as low as 36 in January and as low 39 in March without immediate declines. The action after both occurrences appeared to be major distribution but did not destroy the market.
The daily sentiment indicator, which I showed a chart on for a while this year, has never reached really screamingly bearish levels.
AAII sentiment is less exuberant now than in September. Investors intelligence was reported by as possibly bearish by its publisher this week and last, but others disagree.
As he measures it, George Slezak finds the institutional (commercial) short interest in stock index futures now to be the greatest in its history. Commercials have not been a timely indicator for reversals, and some see their shorts as indicating large scale hedging of larger scale buying, much like margin debt in stock accounts.
Many economic indicators are nearly "as good as it gets", but we haven't yet had the killer news or disaster to catalyze a decline. Nor should we forget the inexorable moves of the 1950's, 1960's, 1980's and 1990's which ignored all suggestions that markets had to go down. Perhaps it is simply a bull market which is intelligently hedged and therefore safe to move up in stealth fashion.