Gluskin Sheff analyst David Rosenberg says that not only is there no V-shaped recovery on the horizon, this market is not trading on fundamentals.
“This is a stock market that is as overpriced as it was heading into the October 1987 crash and as the case back then, it wasn’t about the fundamentals but about policy discord between the U.S., Japan and Germany," Rosenberg wrote in a note to investors.
“Now, since this is a technically driven market, we are bound to get a 50 percent reversal of the bear market rally, which would take us to 912 on the S&P 500 — so keep your seatbelts on.”
The S&P 500 Index was recently at 1065.29.
Rosenberg has been warning about investor complacency for some time, and notes that the 70 percent rally from the March low in
advance of any serious turn in the economic data was purely a bear
market rally rooted in technicals.
“What happens when the market shoots up 70 percent without taking any serious break along the way?” Rosenberg asks.
“Investors tend to believe that we are into some sustainable new parabolic bull run,” Rosenberg says.
"A market priced for perfection requires perfection on all fronts."
The bear market rally has peaked and equities are in the midst of a major turn for the worse, says contrarian portfolio manager Kim Husebye.
“There's very little question that we've turned,” Husebye told the Globe and Mail.
“The rallies are weak and quite choppy and the volume is light,” Husebye said.
“So even as the selling dries up, it's not bringing in any buyers with conviction.”
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