Just eye-balling the SPX over the last five years or so.
Looks to me as though we overshot on the upside by about 12% in 2007 (SPX hit 1575, but fair value was probably around 1400)...even assuming the massive build-up of leverage in the system was "normal (remember, no one worried about it then).
We then had a significant overreaction with overshoot on the downside with a low around 666, but it should probably have been about 800 (16% overshoot).
Assuming 1400 should have been the top, then we are presently down about 33% from the high, and the move up to 940 being a 17% bounce from 800.
I don't know what all this means, but I mention it to try and gauge a little perspective under more normal conditions.
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