"My concern is that an improbably large number of things will have to go right in order to avoid a major decline in stock market value in the months ahead. We presently estimate that the S&P 500 is likely to achieve a 10-year total return (nominal) of only about 4.7% annually, which reduces the likelihood that further gains will be durable even if they persist for a while longer. In the context of present valuations and a probable Goat Rodeo in the months ahead, my impression is that the recent market advance may be a transitory gift...
If we think in terms of "exhaustion rallies," the syndrome we're observing here is a multiple indicator version of signals like the Coppock "killer wave" - which occurs when the Coppock Curve reaches a peak, declines, and the market then recruits an advance large enough to establish a second wave higher. Some technicians have debated how best to define the signal (e.g. the decline required to define a negative shift) - in our view, it's not a good idea to use a single indicator in the first place - but in any event, the selloffs from those exhaustion waves have often been brutal, and a few overlap the syndrome outlined here.
In short, market action is presently showing features associated with "exhaustion rallies", which have often been followed by deep losses over the following 6-7 month period.
John Hussman, Goat Rodeo
The markets may very well decline at some point. Perhaps after Romney sews up the nomination.
But do not try and get in front of it. Wait for it.
Never underestimate the willingness of the Fed to puff up an asset bubble that benfits Wall Street. And never underestimate the willingness of the sociopaths in the financial sector to hold the nation hostage to get their way.
