Sometimes people get a bit overwrought. In a post today, Mish asserts that a proposed 0.1% financial transactions tax would cause the stock market to crash. If he is at correct, and he speaks to many people, that would suggest that stocks are wildly overvalued. There's too much short-term trading by far.
The list of negatives mounts, ranging from the waning momentum, reversal of the rally in commercial real estate securitized debt, the near certainty that Citigroup would be insolvent were it not for all the massive government support, the certainty that Fannie Mae is essentially insolvent, the absurd attempt to reflate the housing bubble with full faith and credit loans from FHA, the fact that stocks rose all week on steadily declining volume, and the (so far) perfect trend reversal of the VIX.
Perhaps the event that will spark at least a brief bear move in the stock market will be the involvement of a big fish in the hedge fund investigation. Zero Hedge is suggesting that SAC Capital is being looked at by the authorities.
Given our post yesterday about fundamental overvaluation per "q", the weakening technicals should be respected.
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