This markets days are numbered

A correction leading to a downturn is likely before serious issues are resolved, such as:

Central Banks are in a Blind Alley

Central banks can not readily afford to be even more accommodating than they already are towards any market downturns.  Even without doing anything much they are reneging on their overdue expectations to withdraw liquidity and tighten rates.  The main support they can offer is confidence in their operations but this confidence will not last for long in the face of ineffective action during a market downturn.   

Insanely low Volatility

The market has become a reflection of algo driven automated trading, relying on mean reverting methods with an emphasis to dampening volatility.

This is not a normal state.  Never before has the vix been so low, so much for so long.  This is for both realised and implied or anticipated volatility.  This is indicative of a central bank controlled and manipulated market.

Politics:

Debt ceiling debate,

Health care fiasco,

Tax reform,

Intrigue of the investigations behind the USPTO

A crisis in confidence in the lack of action in Washington

Unfunded pension liabilities

Instability in relations with Russia

The war drums beating for North Korea.

Why the arguments in Support of the Bullish Case for the Market are flawed

Ultimately the valid warning signs of an over extended market are being turned round to suggest that they represent a new area of growth and stability.  This flawed argument is then backed by a unrealistic faith in central banks to overlook the dilemmas coming crisis central bank policy is entering into. 

1. Volatility

There are arguments that suggest the low Volatility of the market is not a danger sign, but represent a new era of growth and stability.   This is a naive view.  There is ample evidence to show that the Volatility is dampened by Central bank actions and liquidity.  Therefore, to say the cause is the natural wellsprings of economic growth and that therefore the real cause (Central bank liquidity) can be withdrawn is a bad trick and ought to fool no one.

Its like eating a obese man doing a days exercise and claiming that the weight increase is muscle and the result of a new era of fitness.

In fact, volatility is typically low when financial asset classes are at their peak, across the board.

Low Volatility creates a market that is over leveraged, based on expectations of continued low volatility.  Therefore Low Volatility is a destabilising influence in the event of a correction.  These investments in assets linked to Low Volatility runs in hundreds of billions and all need to be deleveraged in a short time, in a time of limited liquidity.

2. Private Sector Funding. 

Signs are the private Sector is investing more and hence the Central banks can withdraw liquidity.

In fact, private sector borrowings are fantastically high, as is leverage and borrowings in the market (based on the premise of low Volatility continuing)

3. Central Banks

The argument is that with economic growth, reflation and private sector funding that the central banks can keep to expectations to with draw liquidity and tighten rates.  These premises are flawed example of  circular reasoning because they the premises are ultimately a result of central bank action in first place