Toppy Markets Confound Technical Analysts

What's more, he noted that the typical recovery following a "bubble low" lasts about 15 months, after which a big decline usually ensues. "If the market were to continue this pattern, then we would be poised for a major correction in the months to come," he added.

Don Hays, president of Hays Advisory, agrees that the market is overbought at current levels, noting that the percentage of NYSE stocks trading above their 200-day moving averages has moved "within a hair" of 90%. Still, he doesn't think the market is about to break down.

"Logic tells you to expect a correction but history tells you that a market able to generate this much upside fuel has staying power over the next three, six and 12 months," he said. Hays believes there is at least a 50% chance that the S&P 500 will climb 31% over the next 12 months.

Richard Dickson, a technical analyst at Lowry Research, noted that the market has been overbought for a long time but has continued to march higher. Still, he does believe a short-term pullback is imminent, because his proprietary buying power and selling pressure indices are about to cross paths.

"In the last 70 years, there have been 33 instances of crosses, and over 50% of the time the cross has been just preceded by or just followed by a short-term market correction," he said. "That's why we think there's a good possibility of a correction in the market."

Dickson said the decline will be modest, however, at about 5%, and he remains optimistic on the longer-term uptrend. "During bull markets, being bullish is the right thing to do," he said. "Being contrary only works when people are bullish and the market is showing signs of deterioration."