Faber said large cap stocks like McDonald's, Coca-Cola, Procter & Gamble and Wal-Mart "have most likely peaked." However, he thinks there are still stocks that show strength that could continue to appreciate "because all the money flows into fewer and fewer stocks."
(Related: Market Crash Likelihood Goes Up If Stocks Continue to Rally: Marc Faber)
"That could bring a new high of 1,700 on the S&P. I wouldn't bet on it," he said. "If someone put a gun on my head and said 'you have to be long or short,' I would take the short side."
On Monday, economist Nouriel Roubini, another noted market bear, told CNBC that the stock market will continue to rise for the next two years on the back of loose Fed policy.
(Read More: 'Dr. Boom'? Roubini Sees Two Years of Stock Gains)
In response, Faber said: "I know Nouriel very well. He's an outstanding economist. I wouldn't use him now for giving me advice on when to buy and when to sell shares nor whether to buy gold and when to sell gold."
"In my view the global economy isn't growing much, as is evident from the sales report of McDonald's, Caterpillar," he said. "The market is a discounting mechanism. It has already discounted QE unlimited. The impact of continuous monetary easing is diminishing."
"(The Fed) will continue to print in my opinion. I don't think they will have an exit strategy, ever. There is no exit. They are so deep into essentially monetizing the U.S. debt. The U.S. Treasury and the U.S. Fed is one and the same. This game will continue for a long time but the impact on the asset markets, that is the question."
(Related: Dr. Doom: The Government Can Take Away Your Gold)
China's Growing Bubble
Faber said that despite China's rapid economic development over the past 20 years, the country's post-crisis fiscal and monetary stimulus "has led to a huge credit bubble. I think that bubble is rather dangerous."
"I do not believe that the Chinese economy is growing by 7.8 percent. Rather, 4 percent or even less. I think the credit bubble will come undone sooner or later. "
He added that some sectors and regions of China could be contracting while other areas continue to grow.
Where Faber is Putting His Money
Faber said he has been bullish on equities since 2009 and currently has an allocation of 25 percent in stocks and 25 percent in corporate bonds. However, he is "very concerned" about the future.
In Faber's view, the corporate bond market in emerging markets is "fully priced" and the equity market in countries like the Philippines, Indonesia and Thailand are very expensive.
(Related: What Happened in Cyprus Will Happen Everywhere: Marc Faber)
He said that his equity exposure will likely diminish in some countries, but he is buying Vietnamese equities. He also said that he's considering buying Chinese equities "at some point" and will buy more Japanese equities on a pullback.