In brief: the Dow Jones is overvalued

Despite the optimism surrounding most US macroeconomic references, from somehow lower unemployment to an almost visible recovery in the housing sector, consumption and retail sales, Wall Street should tread carefully. Equity markets show no rises in the short term, and previous maximum levels still seem out of reach.

For all the favourable sentiment, the US economy and particularly the US public debt gives scarce reason for stocks to find themselves at the current high prices. Overbought levels are piling up in the short term, indeed. What I would do is taking short positions, betting at a market drop just above the previous maximum levels, and keep an open eye on significant movements.

Coming references will have an important impact in the short term, and the bias that data will show will be specially relevant. March 27 is a day to watch; markets expectations point to a spike but the truth of the matter is that the price being now paid is too expensive.

Technically, and bearing in mind how fundamentals look like, US equity markets may register losses of 8 percent to 10 percent. That is, unless contrarians maintain fresh their willingness to afford the excess.