Well, since I yet to find anyone prove to me that a stock or market should priced at particular price on a quantitative level by using a formula and have it be repeatable at any given time, I find worthless to count on what fundamental metric has been used in the past. Don't get me wrong FA is very important, but investor perception is the ruling factor in the market. You have to have mass acceptance to use any quantitative yardstick. I put in other words. If the market was run by a bunch of lawyers, they would see the past as setting precedent. We are not dealing with mass of lawyers playing the market, we are dealing how people perceive the market, a stock, a company, the economy. Frankly I find it too easy to expect the market to be govern by past quantitative metrics. What I find way more important, then quantitative gauges, is how people feel about how they look at the future and how they perceive the potential that is locked away in a stock. This perception of potential is voted on daily by how and what investor buy and sell and can be easily seen by using charts.
I do not look at this rally like the one we had in January, because of amount of information that has been released. In other words, the companies have spilled the beans. We know it's bad. The only question left to answer is will be worse 6, 8, or 12 months from now? Right now, I see an investors that sees the market not selling down on bad news, and one that sees the FED that is obvious market friendly, and an investor that has seen the market drop far, who wants to participate in the market, and knows that it's impossible to time, and realize that we are going to have swings, beginning to accept that this is the time to move back in. Furthermore, I really doubt there are that many investors left hanging around, due the length of the selling, that want to get out at any cost, so the overhead resistance negative potential has been medicated. So, in order for me to give you an answer, I have to accept the investors psychology would be repeatable at a given PE or some other metric, which I can't do.
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