Ned Davis Research says a bear stock market, generally defined as a decline of at least 20 percent, isn't out of the question for this year.

In a report issued Friday, the firm, which has been bullish on stocks for most of the rally since March 2009, says it expects continued gains for now, The Wall Street Journal reports.

But the firm warns that if investors grow overly enthusiastic during the next several weeks, sending prices too high, the market could tumble later in the year, the paper says.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

Ned Davis Research looks at various indicators to determine whether a bear market is coming. These include ones measuring whether stocks are ascending broadly through many industry sectors and countries, or whether a shrinking cadre of large, expensive issues are leading the market higher.

The second situation has pointed to bear markets in the past. But while the indicators have dipped a little recently, they don't point to a bear market yet. So Ned Davis isn't steering clients clear of stocks yet, The Journal reports.

One expert who believes a big drop is definitely in store for the market is Marc Faber, publisher of the Gloom, Boom & Doom Report. He thinks Federal Reserve easing has artificially inflated stocks.

"I think the market is way overdue for a 20 to 30 percent correction," Faber tells CNBC.
"In fact, I'm hoping for the market to drop 40 percent so stocks will again become — from a value point of view — attractive."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

Related Stories:

• Dennis Gartman: Stocks May Sink Another 16 Percent in 'Ugly Correction'
• BofA's Subramanian: Stock Selloff a 'Great Buying Opportunity'