Wednesday, May 12, 2010

After the Fall: Stocks Remain Overvalued

Last week's plunge in stocks was the sharpest drop in more than a year. But it still was not enough to correct the precariously overvalued position of the excessively leveraged (inflated) stock market.

82% of stocks on the S&P500 are still above their 200day moving averages, even after last week's plunge. In fact, the overvalued positions are even more extreme than anything seen in 2007-2008.

Stocks are even more overvalued; values are even more inflated; the real economy is even more burdened by excessive debt; the "recovery" is even more phony than the 2007-2008 bubble that preceded it.

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