Do You Feel Lucky, Punk?

Based on market activity today, not so much apparently.  Lance Roberts emphasizes today a valid point that market direction is only loosely tied to valuations and more directly tied to market sentiment.


http://seekingalpha.com/article/3453466-all-bubbles-are-different?ifp=0&app=1


Thus, an undervalued market can continue to fall and, as we have been seeing, an overvalued market can continue to climb. 


It would seem we have passed through the light and are turning to the more pessimistic side of emotions.  Indeed, we generally did so some time ago, but the market has been artificially propped up for some time by corporate share buy backs and the like.  During a downturn last week, for example, all sectors were selling except the corporations themselves, thereby obviating what would have been a rather nasty negative market fall.  As Zero Hedge observed, Goldman Sachs, who does the buybacks for many corporations, set a new record that day.  You have to wonder whether any of said corporations exceeded their daily limits on buybacks that day.


Obviously there can be other manipulations impacting the market running counter to emotions, with China government intervention being the most stark.  Government wonks in the U.S. do their best to calm jitters as well, though not to the point of arresting those who dare short the market.


But alas, in the long term true valuations tend to rule the day on people's emotions and computer programs will in time multiply that effect.