A couple of months ago, we here at Running of the Bulls were pounding the table on the generational opportunity to buy stocks as equities were trading at multi-decade low valuations.

Since that time, stocks have risen over 40% off the March 6 bottom.

And with the meteoric rise, valuations are no longer attractive. 

I am using $67 as my normalized earnings on the S&P 500 by applying a 7% margin on trailing sales per share of $960.  With the S&P 500 closing at 940 on Friday, the market is trading at 14x trailing normalized earnings.  The historical trailing earnings multiple on the market is 15x.  The median multiple on estimated earnings of the stocks in the Russell 3000 is 13.5x, also slightly below the long-term average.

A normal or average valuation assumes a normal or average economic environment.  Today is not a normal nor an average economic environment.

I believe that economic Armageddon is off the table.  The market was stupidly priced in March.  But we must understand that even though the economy is ticking up slightly, the next several years will not be typical as many issues will continue to weigh on the economy for some time. 

This means that the market will most likely be a traders market for the next few years.  At these levels, given the state of the economy, stocks trading at average multiples in a below average environment is not a good risk/return trade-off, in my opinion.

This does not mean stocks cannot move higher.  Valuations mean little in the near-term.  The near-term is dominated by news flow, expectations, momentum and liquidity.  The market has been rallying because of liquidity and because earnings are coming in above expectations.

However, given that we are in a traders market, rising markets are to be sold and falling markets are to be bought.  I am a seller into this rally.