The S&P 500 has rallied 19% year-to-date, as signs the US economy is finally recovering from the financial crisis boost investor optimism.

But Faber (pictured), dubbed ‘Doctor Doom’ for his persistently bearish views, said the US equity market is exhibiting strikingly similar characteristics to those seen in 1987.

That year saw US equities post 30% gains from the beginning of the year to 8 August, before plummeting 36% to the lows of October’s ‘Black Monday’.

“In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,” he told CNBC.

“The final rally into 25 August occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.”

Market movements earlier this week exhibited “remarkable” similarities to 1987, he said.

“We are close to the all-time high, at 1,709 on the S&P, and yet [on Tuesday and Wednesday], there were 170 new 52-week lows. That’s a very high figure.”

“The only way this market can go up is if the 10 or 50 stocks that are very strong continue to drive the market higher, with the majority of stocks having actually peaked out.”

Instead, Faber’s gloomy prognosis means he is forecasting falls of 20% by the end of 2013.