In essence, Levkovich notes that the recent sharp move has come about as liquidity concerns have shifted to the sidelines; upward momentum for stock prices following the shutdown ending is just pulling in more short covering while long-only investors also have been buyers given the need to meet alpha generation or benchmark requirements; but operating performance by companies is simply not there in the manner that is perceived. As he concludes, "we have not seen this kind of deviation before and it is troublesome to us... we must admit to being a bit worried that investors might be facing some near term volatility."
A quick translation. The stock market gains and housing bubble is crrently a inflation effect, there is no growth to back up these claims. Various investors are betting the market goes lower, and as the bubble drives up prices, these investors lose, and they have to buy in the market, thus driving up prices further. Once the shorters retire from battle, the market will collapse because the shorter will cause a smooth decline if they play the short game. Absent the shorts, we get a collapse.
Many of the recession indicators will be popping higher soon, a downward correction is eminent.
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