Smoke and Mirrors (and why not throw in some magic)

Do you see this headline? What are they implying? Don't move a muscle, I'll take a swing at this question. I'm glad I read this article. I thought we might have ended lower because the market couldn't find enough money to throw into the fire since there wasn't enough news that the bulls could spin their way. I guess I was wrong. All that happened was "profit taking." That is reassuring I thought it had something to do with a slowing economy or the $2+ jump in oil! For record, I'm not a permabear or really even consider myself a bear.

With that said, I have been taking more short positions. I think the economy is slowing, but won't land into a recession. I don't think the Fed will have to raise rates because he can get the need effect where we are now without a cut or a raise. A raise will probably shock the economy too much and a cut will inflate inflation. Now what I don't understand is why the economy is slowing from a run to a walk, but the stock market is still running and sometimes sprinting. There seems to be a disconnect. An equity price is supposed to reflect future earnings and if these future earnings are lower, why pay more? Sure at some point down the road they will be higher, but how much are you willing to pay today to get higher earnings two years from now. I often hear that, on a P/E basis, the market isn't very expensive. That sounds great, but how will that argument work when prices rise and earnings shrink. Let me explain how math works, when you divide a larger number by a smaller number, the result gets larger. Now apply that to the P/E argument and things start to look more expensive. But, I'm just one man against the market.