I feel strongly that domestic stock valuations are stretched. I believe the median stock valuation has never been higher. This view is shared by others, among them John Hussman. Also, if you Google "OFR, Quicksilver Markets" you will find a piece by Department of Treasury's Office of Financial Research that leads to similar conclusions. Of couse you can use the favorite model of the Fed and Wall Street, the Dividend Discount Model, to show the market is at fair value. This model is unreliable over longer time horizons.
The NASDAQ is the worst offender of overvalued indices led by the social media, biotech, tech and any of the high multiple story stocks. The index is driven by these large high multiple stocks. Point of fact, the NASDAQ outperformance can be largely attributed to AMZN, GOOG, AAPL, and GILD.
In my view the Dow is more representative of what is currently going on in the market generally. The number of stocks hitting new 52 week lows is growing, while the number of 52 week highs is shrinking. Again, the construct of the NASDAQ, as well as the S&P 500 as market cap weighted can be distorted by high market cap companies. That is what you are seeing.
It is my belief that we will experience a severe downdraft, likely similar to 2000-2002 and 2007-2009. The percentage down on the S&P 500 was 54% and 59% in those two instances.
The Federal Reserve has few tools to stem the next crisis. I cannot understand why so many ignore the warning signs. Perhaps blind or wishful thinking. The Slope of Hope.
Unfortunately, the financial media does not discus this fact, and stock market valuation measures enough.