Not Cheap

If the market was cheap, it would not be going down 15% in a week.  Insiders would be buying aggressively.  I find it hard to believe that this market is 80 points better than the May 2010 market when we bottomed at 1040.  The global economy was stronger then, the only difference was that the decline in 2008 was fresher in everyone's minds.  There are very few bargains out there.  You are betting on someone else to buy your stocks at overvalued levels.  That is a tough bet to make in this economy.  Don't blame HFT.  HFT only affects your fills, it doesn't have an effect on market direction.

These attacks on Soc Gen and Italy and Spain would be brushed off if the fundamentals didn't justify the weakness.  But fundamentals in Europe are horrible, so its hard to fend off the attacks.  Last May, the market was able to bottom and brush off the European weakness because of the lower valuations and better economic outlook.  You have to get to lower levels to really be able to bottom strongly and thrust higher.  All oversold bounces are selling opportunities until we get to at least May - July 2010 levels.