After a 40+% gain from the March lows on sub par volume, the S&P 500 seems overvalued relative to the current conditions in the economy. With companies beating on the EPS front due to cost cutting and reduction in head cut, revenue has been for the most part has not matched top end expectations. Hence, although the worst may have come and gone, we are still not out of the woods in terms of excess in the financial markets. With this added global stimulus program, we maybe in for another bubble to burst with the Chinese Shanghai markets up over 90%.
Clearly there is a lag from what actually happens with the economy and the stock market, however if we continue to buy at this point we may find ourselves paying over what the historical value is in the market.