While the Federal Reserve's continued quantitative easing (QE) will keep stocks aloft for now, they're grossly overvalued, says Bill Fleckenstein, president of Fleckenstein Capital.

"The [price-earnings ratio] on the S&P 500 is 16, 17," he tells CNBC.

"Why would you pay 16 times for an S&P company? I don't care about where rates are, because rates are artificially suppressed. Why isn't that worth 11 or 12 times [earnings]? Just by that analysis, you'd be down by a quarter or 30 percent."

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The Standard & Poor's 500 Index closed at 1,792.50 Tuesday. A 30 percent drop from that level would put the index at 1,255.

The S&P 500 soared 29.6 percent last year, and Fleckenstein attributes that gain to the Fed's massive easing program.

The Fed "printing money does not make the economy work, but it sometimes makes stocks go wild," he explains.

And as long as the Fed continues QE, and investors trust the central bank, "it's not an environment in which you can put together a logical argument to be short and stay short," Fleckenstein argues.

But as the Fed continues to taper, the picture will change, especially if it ends up having to reverse the tapering.

"If they taper, they're going to get a lot of weakness. People are being very macho right now, they think that if the Fed tapers it's going to be OK — and it might be for a little while," he notes.

"But the market's going to end up lower if they keep tapering, and they're going to have to come back the other way. Then at some point, people will see that the Fed is trapped, because what they do doesn't work, and they can't stop."

Charles Biderman, chairman of TrimTabs Investment Research, says continued tapering would hurt stocks. "The bull market is solely due in my opinion to the Fed pumping money, . . . more money chasing fewer shares. And the more money has come from the Fed," he tells Yahoo.

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