The prices of the S&P are compared with (red line) what the fundamental value seems to be: 14 times trailing earnings corrected for the cycle (with ISM/50). This shows the S&P went up about 200 points too much probably because of QE.
It could have been that we have seen the highest point at May 22 when the taper discussion of QE started in earnest.
The phases of the cycle
Cautious, not brave enough to buy= AB
Hopeful, should I buy?= BC
Encouraged, start buying=CD
Positive, forgot to buy the dip=DE
Confident, let us buy=EF
Thrilled, buy the dip=FG
Euphoric, buying as much as possible=GH
Surprised, in denial of the decline=HI
Worried, but relieved the decline is not getting worse=IJ
Panic Stricken, everything must be sold=JL