Market Is Overvalued, ‘Drag Your Feet’ on New Stock Buys, Says Johnson

"Bull markets don't go wrinkle free," says Hugh Johnson, chairman & CIO of Hugh Johnson Advisors. "They get a bit overvalued and a little undervalued. Right now, if anything, we're a little overvalued."

Not wanting his observation to be construed as a trading call, Johnson says no one has a timing edge, even if they claim otherwise. The prudent thing to do as he sees it isn't to jump in or out of stocks entirely, but simply to "drag your feet when it comes to making new commitments to the equity markets."

While not a trader per se Johnson does have his timing "tells," one of which is to take money off the table when a stock or sector's price starts to lag that of the market as a whole. Trim a little to stay ahead of a real pull back that tends to shake investors out at the lows.

On a 5 to 8% pullback, Johnson is a huge buyer. He sees no evidence whatsoever that the bull cycle is coming to an end (fits and starts on the economy aside).

Johnson's biggest contrarian play is a whopper. "I think the big surprise for the remainder for this year is that the economy in Europe starts to do a little bit better than people except," he predicts. He sees a spread between leading indicators in Europe and what economists are forecasting and finds it to be an "interesting anomaly."

By "interesting" Johnson unquestionably means bullish.