John Hussman of The Hussman Funds Sees Stocks As "Strenuously Overbought"

In his weekly market overview John Hussman, Manager of the Hussman Strategic Growth Fund (HSGFX), described current market levels as "strenuously overbought". He states the combination of a moderately overvalued market (priced to deliver 6.6% annually over the next decade) and the technically overbought condition usually produces poor returns going forward.

Hussman also notes that Alt-A and option-arm adjustable mortgage resets are beginning again, after a lull since March 2009. This should prove to be a notable headwind to any organic (non-government sponsored) recovery.

Another concern explored is a comparison of current technical indicators (20 month moving average and Bollinger bands analysis) and the same indicators in April 1930. During that time after the initial crash the market rallied strongly, recouping 50% of the initial losses. However after that snapback rally, the markets commenced the downward trend making new lows.

In response to these indicators Mr.Hussman removed all general market exposure in his Strategic Growth Fund (HSGFX) and is now fully hedged.