With European stocks at five-year highs and investors pouring money into the continent, some equity analysts are now predicting a pullback.
Recent fund flow data highlights the turnaround Europe has made as it pulls itself out of its worst recession for over 40 years. Bank of America Merrill Lynch indicated last week there have been 16 straight weeks of inflows to European equity funds, which is the longest streak in 11 years.
But Mike Ingram, a market analyst at BGC Brokers, believes that this "Eurotation" could be about to end.
"I get the feeling that we may be in for a little bit of a pullback," he told CNBC Monday.
"If you look at the relative performance of Europe over the last three months versus the U.S., you've seen an 8 percent outperformance in local currency, if you factor in the strength of the euro it's 13 percent."
The pan-European Euro Stoxx 600 Index rallied by 8.5 percent during the third quarter of 2013 as the economic data became stronger for many struggling euro zone countries and valuations of stocks looked appealing against those in the U.S.
Ingram said that this momentum and positioning is one of the reasons for his uneasiness. Political wrangling in the U.S. has also meant investors have used the euro as a safer investment over the dollar, with the stronger currency putting pressure on European companies, he added. The next step-up in European equities would require strong earnings reports, Ingram said, something that he hasn't so far witnessed.
(Read More: European equities looking cheap as recession eases)
"The bottom line for me is that European companies really need to start delivering the goods in terms of earnings. The current (earnings) season and any guidance – such as it is in Europe – will be crucial in determining whether the last three month's outperformance of European markets is set to continue – or shifts into reverse," he said in a research note.
"Certainly it seems to me that need to see earnings momentum reverse in the EU for this trend to continue or 'value' will become 'value trap'."