What we've had is a disconnect between stock prices and the real economy. By most measures, we are still in a deflationary cycle. The numbers quoted so far this year are better than they were in January, but by no means are they catching up to last year's data. Some sectors are moving rapidly downward. Unemployment is up and people are not able to find work. Some 400,000 people have exhausted their benefits this month, and by the end of the year 1.4 million people will have no benefits. We have an army of 5.4 million people who have been unemployed for six months or more. Foreclosures have been rising this year and continue to climb.

Coming back to the market, P/E ratios are around 19, well above the ten-year average. Just this simple statistic is a warning signal that stock prices are too high.

Around the globe, the current rally has added about $20.1 trillion to the value of stocks worldwide.

Roubini feels that the piles of money being printed are leading to an asset bubble in stocks and commodities and could be seeding the next bout of financial chaos.

Now we come to that old stock market adage: "When in doubt, stand aside." Or better said: "When in doubt, don't." Unless you are looking to short the market here, it's best to follow the adage. Wait until you see unemployment in particular turn around and jobs are added on a monthly basis, not the continued hemorrhaging we are seeing now with 263,000 jobs lost in August.

Would you take a modest short position in the stock market at these levels?