Over-bought markets provide good value on long-term perspective

From extreme pessimism and oversold levels in early March 2009, equity markets have been quick to re...

From extreme pessimism and oversold levels in early March 2009, equity markets have been quick to rebound. There has also been some recovery in the credit markets, with prices hardening and spreads narrowing as liquidity returns. The turnaround has been remarkable but therein lies a pang of doubt. Have investors cast aside their pessimism too quickly? The S&P 500 has rallied more than 25% from its low on 9 March to late April. The market was due a rally of sorts since it had reached oversold levels in March. Short covering may have propelled the market higher in March but investors also t...