May you live in interesting times.

Talk of an election - click image to read more.

Which is said to be an old Chinese curse, but this week could equally apply to the UK Prime Minister given the latest shenanigans in the BREXIT process and there is even talk now of an early election (click image above for more details).

Investors probably feel it has been applied to them too as in addition to the fall out from the BREXIT legal challenge we have the US election result to look forward to as well as the possibility of a rate rise in December from the US Federal Reserve. That is of course assuming that markets don't have another rapid downward lurch which scares them off from doing this again as it did last time they were thinking of doing this. We saw the Non Farm Payrolls data yesterday which were slightly light of consensus at 161,000 jobs created although this did bring the headline unemployment rate down to 4.9%. This puts that indicator just below its 12 month moving average which reverses the move above the average we saw last month hence negating the recession indicator in the short term, but this will need watching in the months ahead.

Meanwhile in the UK market we got hit harder this week by these concerns and thus the headline indices like the FTSE All Share and FTSE 100 fell by around 4% on the week while Mid and Small caps only fell by around 2%, although they may play catch up next week. In terms of the timing indicators at the end of October these were still showing bullish trends with most of the indices around 8% above their moving averages with the exception of the Mid 250 which was only around 4% above. Thus for now the bullish trends on these measures remain in tact, but we'll have to see where we end up by the end of November.

Personally I have been getting a bit more cautious about markets recently and the recent moves and news flow have done little to reverse that caution. However, it is probably still not worth taking too much avoiding action unless you have lots of speculative positions or are running with gearing. We may see more of a shake out in the short term but once the dust settles post the US election then seasonality might kick in with a year end rally perhaps. As discussed above, given my current caution on markets I wouldn't get carried away with any rally and would probably view it, if we see it, as an opportunity to take some risk off and get a bit more defensive. So mind how you go out there and watch out for fireworks today in the UK and next week in markets too, mind how you go.