Markets do 2 things:

- they do the opposite of what people expect, for a while at least. Recall the dot com bubble: markets kept going up for months after everyone started questioning the basis of the rise – they crashed eventually.

- they anticipate state of the economy 6 months forward. Markets are always forward looking. Right now there isn’t sufficient clarity where the world economy will be in 6 months’ time. Expectations for the economy by and large are not very bright, yet stream of better than expected news keep coming in.

Aug. 17 (Bloomberg) — China’s stocks fell the most in nine months, driving the benchmark index below 3,000, as metal prices slumped and a loss at Yunnan Copper Industry Co. stoked concern this year’s rally was overdone.

Yunnan Copper, the nation’s third-biggest producer of the metal, sank 9.5 percent after posting a first-half loss. Zhuzhou Smelter Group Co., the biggest producer of refined zinc, slid 8.9 percent. Copper and zinc tumbled by the daily limit in Shanghai. SAIC Motor Co., China’s largest carmaker, retreated 8.4 percent after more than doubling this year. Baoshan Iron & Steel Co. dropped 5.6 percent.

The Shanghai Composite Index, tracking the bigger of China’s exchanges, fell 154.82, or 5.1 percent, to 2,892.16 as of 2:27 p.m. local time, set for the worst day since Nov. 18 and the lowest since June 19. It slid 6.6 percent last week, the most since the five days ended Feb. 27, on concern a slump in exports and new loans will damp economic growth. The gauge remains 59 percent higher this year.

Aug. 14 (Bloomberg) — U.S. stocks are “dramatically overpriced” because the fallout from the financial crisis will continue to hurt consumer spending, said David Tice, Federated Investors Inc.’s chief portfolio strategist for bear markets.

The Standard & Poor’s 500 Index has climbed 50 percent from a 12-year low on March 9 on speculation the economy is recovering from the worst contraction since the Great Depression. The rally pushed the index’s price relative to trailing 12-month operating earnings to 18.65, the most expensive since December 2004, according to weekly data compiled by Bloomberg.

Hell yes,The so called bear rally was nonsense from the very begining. There is no equity in businesses in public companiesat the moment, and there won’t be any until we address the real issue. That is the world economies are not growing large enough and have not been for decades.This is why you get Dot Com and Real Estate bubbles to begin with. See a partial solution to this problem at http://bettertomorrow-holymoly.blogspot.com