Having updated the Simple market timing indicator that I have written about before, I found it interesting this month that FTSE 100 had moved further above its average than the FTSE 250. Nevertheless all UK indices remain above their averages so still in buy / hold territory.
However, this reflect the moves seen last month where we saw a sharp sell of in some mid cap stocks which had done well. While larger cap stocks, were helped no doubt by rises in pharmaceutical shares on the back of the AstraZeneca bid approach and Oils which reported higher dividends which led to a rise in BP and RD Shell in particular. I guess the Ukraine tensions and higher oil prices helped.
The other feature I noted was the increase in Companies warning about the drag to their sales and profits from underlying exchange rates as the Pound hit five year highs recently. It may help to keep a lid on inflation by making commodities priced in dollars cheaper and also enable the B of E to remain sanguine on interest rates given the tightening effect from a firmer exchange rate. However, the deputy governor was expressing concerns about the housing market so time wiil tell on that one, but I still don't expect a rate rise in the UK until next year at the earliest. The firmer Pound (if it lasts) will also hit dividends from the UK market as a whole as a number of the bigger corporates report and declare dividends in US dollars - so a trend that is worth watching.