Belated Market Timing update.

I have written about this in the past which is based on following simple moving averages to decide whether you should be in or out of an asset class. The US version is still showing as invested for US equities, but says cash for International equities ex US and unsurprisingly the same for commodities.

In the UK these indicators which I have been following for the FTSE equity indices turned bearish at the end of September and remain like that at the end of October, despite the V shaped recovery we had in the month. The recovery continued into November and this has had the effect of turning most of these indicators bullish or invested again, although only to the tune of about 1% to 1.4%. The only index to remain below its moving average by 0.7% and therefore in avoid / sell territory is interestingly the Small Cap index.

However, as I have observed in previous months the risk, as we have seen in the last few months, is that you can get whipsawed into selling out and buying back in if the market is volatile and trading sideways as it has been doing recently.
This seems especially so when central banks seem determined to rig / support asset markets as all costs. Now anyone who panicked out in October has to decide if they go back in up here or hope for another correction, not an easy decision.

So I tend to try and stay in the market rather that try to time it myself and also as a stock picker I am more interested in individual stocks and their valuations / prospects rather than worrying too much about index levels. Having said that though you do need to keep an eye on overall valuation levels and economic prospects as these will have a bearing on future returns which are ultimately heavily influenced by your entry point and the price / rating you pay for your stocks.

To tie in with the timing indicator today I have a technical analysts view of markets for you in the Advent calendar today.

Click to open for a technical view from Money Week