Regular readers will know that I have been following a market timing indicator based on a simple rolling 10 month moving average of total return indices. By way of recap, if you have not seen my previous posts on this, these indicators suggested selling or being out of the market at the end of September 2014, handily just before the sell off in October.
However, after the Japanese Central Bank rode to the rescue these indicators flipped back to suggesting you should be invested again in November, with the exception of the Small Cap index which remained below its 10 month simple moving average. This demonstrated the risks of being whip sawed by this type of trailing indicator based on moving averages.
Now as if to reiterate that December saw most of the main indices like the FTSE 100, 350 and All Share flop below their averages again and thereby giving another sell signal. The Small cap index has remained below its average since September, but it is still only by 0.3% below which is in line with the 350 and the All Share, while the the FTSE was 0.9% below. Interestingly the Mid 250 remained in buy / hold territory as it provided positive returns in December and is now some 2.8% above its moving average as it is not so weighed down by oil and mining companies. Meanwhile the US version maintained by Doug Short still shows invested for all the main US indices and has further commentary on these indicators.
So a mixed picture here, with the market being down last year in the UK and maybe it is running out of steam close to its highs. With the UK General Election coming up in May I guess we could be in for a tricky first half. The other worrying anecdotal evidence I had this Christmas period came from lets say "acquaintances" who for the first time since 1999 started asking me about investing in the Stock Market and what sort of returns they could expect. We are even seeing crazy valuations on tech stocks like Snapchat too, deja vu? Oh well - in terms of timing it reminds me of something else from the past the old VW advert below. However, who knows maybe Draghi will motor to the rescue this time with a dose of Euro QE to make it a Happy New Year for investors?