"The mother of evils is speculation--leveraged debt."
--Gordon Gekko (Wall Street: Money Never Sleeps)
Many market participants are scratching their heads, wondering how stock (and bond) prices continue to levitate at what by conventional measures seem nosebleed levels. They also wonder why technical indicators of trend reversal don't seem to be working as they have in the past.
Maybe it's all about the truly historic amount of leverage in the system. Note the correlation between Fed balance sheet holdings and the SPX:
Longer term, look at the correlation between total system leverage and SPX:
Leverage is a function of credit price and risk appetite. Cheap credit prices and high risk appetite have driven stock prices higher.
Higher credit prices and risk aversion will do the opposite.