Australian Investment Blog

Buy signals generated by equities last night, I cannot be short equities!

Last night, the US Fed Reserve minutes calmed the markets’ nerve with rhetoric that amounted to “slow and steady,” but the substantial rally (Dow up 1.6%) was what caught my eye. The US market last night showed yet again, that the path of least resistance remains up, what you would expect in a healthy bull market. The stars may be aligning with signs of life in China, with the best PMI since early 2013, Alcoa smashing earnings estimates this morning and almost everyone now bearish (see chart 1) looks like a potential low.

Since 1980, the October/November/December period on the S&P500 has a median gain of nearly 5.3% (7.8% since 2001).