August was another positive month for the UK equity market as the post BREXIT recovery continued as the problems suggested by project fear / remain campaigners have in the main failed to materialise in the short term. In fact the only thing that they predicted that has really come to pass is weaker Sterling. This has in fact also been a double edged sword as it has potentially actually benefited exporters and helped with the translation of profits for those companies with overseas earnings and dividends.
Any way this leaves all the UK indices from Small Cap up to FTSE well above their 10 month averages by around 8 to 9%, although unusually the Mid 250 remains something of a laggard being only around 6% above its moving average. Meanwhile the US Unemployment rate remains just below its average which is supportive too, but it will be interesting to see if this afternoons numbers make any difference to this. Even if US Unemployment does turn upward through its average this will not be a sell signal until the Indices cut down through their averages.
Looking at the data it seems unlikely that this will happen for the rest of this year, unless we see a rapid 8 to 10% correction this autumn, which is always possible as seasonally this has been a volatile period in the past and as Mark Twain said October is a dangerous month to invest. With more talk of a possible US rate rise this month (I'll believe it when I see it) I guess a correction could be possible.
In the absence of that though, things seem set fair for now and the indices should remain above their averages for the rest of the year as there are lower numbers from the end of last year and early this year still to drop out of the calculation. Thus it seems the bull market which started in spring 2009 may stagger on for a while yet thanks to the on going support from Central Banks and the unattractiveness of competing assets such as bonds with small or even negative yields and no immediate catalyst for the start of a bear market.