Phew what a month as the US said goodbye to QE (for now) but then the latest salvo in the Abenomics programme in Japan helped Wall Street to close at record highs again as Bank of Japan governor Haruhiko Kuroda said the bank had an "unwavering determination to end deflation" Thus the market timing indicators for the US remain in positive territory as explained by Doug Short in his latest update, which also explains more about the indicator if you are not familiar with it.
in the UK the same indicators that I have been following remain in sell / cash territory by around 1% for the main indicies and by 1.7% for the Small Cap index. This follows on from the marginal negatives they showed at the end of September thus I guess confirming the sell signal from last month.
However, as I discussed last month the problem with this type of indicator is that you can be whip sawed by selling out and then having to buy back in if markets then subsequently rally. With the baton of QE, which was dropped by Draghi in Europe, now having been picked up by Japan suggests that investors can for now continue to gorge themselves on central bank liquidity which may enable the recent recovery to continue and thereby turn this indicator positive again. Alternatively the lows of the previous trading range on FTSE in the range of 6400 - 6600 could now act as resistance before perhaps a traditional year end rally takes over - who knows, I guess time will tell, but just goes to show that trying to forecast market moves is a bit of mugs game.
This is why I don't really go in for market timing myself in a wholesale fashion but prefer to tweak my portfolio at the margin depending on the type and phase of the market we are in. So having de-risked by selling more geared positions and some riskier holdings earlier in the year I'm happy to remain invested and allow compounding to work its magic as I find it is time in the market and not timing the market which has paid off for me in the long run. As I mentioned in my post in mid October and as Warren Buffet said: "Be Fearful When Others Are Greedy and Greedy When Others Are Fearful".