Where is the Market Going from Here?

What is happening now is this.

The market is coming to a wrong REALIZATION. The market thinks that things are getting better in the economy. In our opinion it is not getting better, it is just not getting worse.  

Many stocks have had huge rallies, some as much as 480% the last 6 weeks, since we suggested a bottom was in. There are multiple takeover rumors daily. The old fliers are getting bid up sharply. Many stocks that we have started to short are trading at 30 to 40 times earnings, while growing at 5%.
These stocks are clearly overvalued. They will continue to rally the rest of the month with window dressing.  Investors and commentators are making a wrong assumption. They are assuming things are getting much better. They are not and cannot with unemployment over 10%.  So here is what we think is going to happen. The market may rally to 8,500 to 9,000, but then will come back down to the low 7,000’s. 
What will cause that to happen is that investors will realize they are paying substantial premiums to earnings for many companies. That last sell off is when we want to go long, because that in our opinion will be the bottom and the World Economies will start a slow steady uptrend.    
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