Hussman: 80% Probability of Market Plunge Next Year, Stocks 40% Overvalued Based On q and CAPE Ratios (Cyclically Adjusted P/E)

From Hussman's November 30, 2009 Report: Reckless Myopia

"In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we've observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle."

"Currently, both q and CAPE are saying that the U.S. stock market is about 40% overvalued."

From Tech Ticker today.

They also mention that Morgan Stanley and SocGen are expecting a correction.  Go to Tech Ticker's post for links. Got put money to blow?? Obviously the market is overvalued on a variety of measures. However it is hard to fight 0% rates and a falling US Dollar (inverse relationship to US Markets at the moment). That is why I've been watching currencies, commodities and bond yields closely, which could give the green light for a potential catalyst. Or the Dow could be headed to 30,000!