Market Timing Update - the AIM index has signalled a new uptrend
On October 10th, I flagged that the AIM market was at its most oversold since the global financial crisis.
That counter trend signal was prescient, but proved to be 2 weeks early. The market bottomed on the 26th October. Since then, we’ve had a strong 8% rally.
Today, AIM has now signalled a confirmation of change in trend. It has broken above its 120-day moving average. This is a timing signal I’ve been waiting for all year after a failed breakout in January.
Why the focus on AIM?
AIM has been a pretty dismal market for returns. In fact, since 1996 the index has gone backwards. It’s full of many early-stage, pre-profitability companies, best backed by venture investors. It’s a massive bugbear of mine that so many speculative, lottery style AIM stocks suck in unwary private investors.
Nonetheless, I love AIM as a timing signal and as a hunting ground for under the radar quality small caps. While AIM as a whole ends up going nowhere, it does trend beautifully both up and down. It’s like a barometer of animal spirits, identifying when we’ve lost our minds in...