The biggest reason for a expectation of a decline in equities by people in the know is the negative divergence with the bond market that is occuring. P/E ratios are not anywhere near historic highs, and even if they were there are several valuation measures that are more predictive of future prices than P/E anyway.
There are many valuation measures that indicate the market is actually undervalued at this point. However, interest rates are the largest driving force of stock market moves. Almost every major stock decline in history has been triggered by a rise in interest rates that has preceeded it, just look at some weekly charts of SP500 with a chart of the 30Yr bond underneath it. The lag can be as much as 6 months.
