Greed is back! S&P 500 sets new record high

How CNNMoney's Fear & Greed Index works
How CNNMoney's Fear & Greed Index works

So much for that awful January for stocks, huh?

The S&P 500 set a new record, while the Dow closed above 18,000 for the first time this year. The Dow is now tantalizingly close to a new all-time high. Even the Nasdaq is approaching the 5,000 mark -- a record it hasn't reached since March 2000.

CNNMoney's Fear and Greed Index, a measure of market sentiment that was showing signs of Fear a month ago, is back in Greed territory.

Love is in the air on Wall Street. And on a freaky Friday the 13th no less. But can the rally keep going?

Next month will mark the sixth anniversary of the start of the current bull market. Many people have pointed out that stocks have never gone up for seven years in a row. So history is not on the side of the bulls.

Still, it's hard to bet against stocks. Every time it seems that a new crisis is about to derail the market and lead to a huge pullback, buyers come rushing back.

Related: Apple and Southwest are among the 10 stocks we love

We're still overdue for a correction: Forget about a 20% drop that would note a bear market. We haven't had a 10% correction since 2011.

The big concerns that spooked investors last month are starting to fade away a bit.

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Oil prices have rebounded to back above $50 a barrel.

Fears of Greece leaving the eurozone haven't gone away but many experts are stubbornly clinging to the hope that Greece's many creditors and the new Greek leaders will avoid the worst-case scenario.

Central banks around the world (with the notable exception of the Federal Reserve) are slashing interest rates and/or buying bonds to fight slowing growth and the threat of deflation. This injection of liquidity could keep stocks afloat for the foreseeable future.

The dollar has weakened a little bit lately as a result. So some of the concerns about a stronger greenback hurting earnings for multinational giants like Microsoft (MSFT), Johnson & Johnson (JNJ), Caterpillar (CAT) and Procter & Gamble (PG) could turn out to be temporary.

Related: Alibaba and Disney are two of the 10 stocks you love

Strong earnings, particularly from tech companies, have helped boost sentiment as well. Apple (AAPL), Facebook (FB), Netflix (NFLX) and Cisco (CSCO) have all reported solid results.

Bond prices have plummeted this month too after surging in January. And that's pushed yields, which move in the opposite direction of bonds, on the 10-Year Treasury back toward 2%.

Good signs for America: Mark Spellman, portfolio manager for the Alpine Equity Income Fund, added that investors are encouraged by continued signs of economic strength in the United States.

He noted that the January jobs report was particularly positive since wage growth picked up. Add the expected benefit of lower gas prices and consumers should be able to keep spending at a decent pace.

"There is some irrefutable evidence here that the U.S. economy is doing pretty darn well," Spellman said.

John Buckingham, chief investment officer of AFAM Capital and editor of the Prudent Speculator newsletter, said that even though long-term rates have picked up, there are many quality dividend paying stocks that offer a lot more growth potential than bonds.

So for now at least, the bull is raging. Investors are happy to embrace risk again.

Related: Top hedge fund dumps Apple, buys Microsoft

Too much euphoria? But there are reasons to be worried that stock prices are too frothy -- just like in 2000.

Paul Ehrlichman, head of global value equity at ClearBridge Investments, said he thinks that the continued infatuation with U.S. stocks is a "crowded trade."

The S&P 500 is now valued at 17 times 2015 earnings estimates. That is not cheap -- especially when you consider that analysts are only predicting 3% earnings growth this year.

Ehrlichman thinks investors are too negative about the rest of the world and that there are better values in Europe, China and Japan.

It's also important to remember that market volatility is probably here to stay for awhile.

Stocks could turn on a dime if something goes wrong in Greece. Or the Ukraine ceasefire collapses. Or if there are more problems in the Middle East. Or if oil prices suddenly plunge again. China's economy could slow faster than expected.

You get the picture. Many of the risks that everyone was freaking about in January haven't magically disappeared. Investors are just choosing not to be as worried about them right now.

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