Well these charts have been beat to death already... Current prices/trailing PE's give you what you see on those charts. Since corporate earnings have bottomed for the most part, I'd argue that E will increase to bring P/E more in line with the norm. Mind you, it is entirely possible that P will come down at the same time, but it is highly unlikely that the P/E ratio will be brought back down to the norm soley due to a decrease in P which is what some people are suggesting.
Still finding explanations and rationalization on WHY the market is up (or down)? If it's a bubble we can simply short, averaging into losing positions? Like people who blew up on short positions in 1997/1998/1999? The more people short this pig of a market the higher it will go.
The more people who short the higher it goes, I think I remember many people trying to call a top throughout 2007, eventually they did call it right and the market topped in October of 2007 and the rest is history. Liquidity is pushing markets higher, its creating more asset bubbles, of course no one sees it now, but its after the fact they realize it. How can a liquidity driven rally be anything positive, once they decide to turn off the printing press and raise rates then will see how this market will do, the only way to prop up the market now though is is with excess liquidity. Remember you can only create so much liquidity before the bubble pops once again. Bubbles always pops.
I think your logic is slightly skewed towards whatever outcomes you desire from the current market. Is a rally ever not a "Liquidity Driven Rally"? The cash always has to go somewhere and right now cash is very cheap, why not throw that cheap cash at equities that are still historically (per 2007) way off recent highs? Raising rates won't affect this market very much as that is already priced in - I don't think anyone believes interest rates are going to stay this low for much longer. If anything we'll see volatility contraction for the next few quarters.
how many times since March have you called market tops and fuxxed it up each and every single time? Why not just following the trend? You may be right about a top in the market but you may be wrong like the other 5-10 times before....
Raising rates wont affect the market? Raising them just .25% would cool down the commodity run for at least a few weeks and prop the worthless dollar for a few days. When you say not much longer, what is your time frame, not much longer to me is that they will be raising them either at the next meeting or the one after. Any longer and they are going to fall quickly behind. This market is completely upside down.
Raising rates - regardless of the tiny amount - would do far more as it would signal to the market that the easing period is over, and we're set to begin moving higher. That, in of itself, would bring a much needed deep correction. I'm sure the Fed is very much aware of that, and it's the sole reason why it won't happen.