I really enjoyed Markets Now on Monday. I think that you were indicating that monetary policy will keep some semblance of equilibrium in markets but I will feel better if we see more evidence of markets settling. I don’t think I handle it all as well as I used to! I had to sit down at the American Bar.

The following chart did cheer me up though. I was reviewing a client portfolio ( smaller cos investment trusts as it happens) & was struck by just how much the long term chart below reminded me of what I read years ago by Edwards & Magee or Murphy or whatever – on the ‘formation’ of a ‘classical bull market’.

Turning to the next page in those books I think they would have then said that a retracement of 30-50 % is quite possible but thereafter at least 2 more bullish upswings. What do you think? Unfortunately because of the way regulation works (or doesn’t??), I cannot really indicate this to a UK ‘regulated’ client.

 On a completely separate matter, I hope you do not mind me asking this?

You may have seen that the business man John Caudwell & his family have been struck down by this terrible Lyme disease. I have a client (in fact I did bring him to Markets Now about a year ago) who has a grandson suffering very badly from this. I think that the family are desperate for any ‘cure’ & my client who is a scientist himself is trying to obtain as much information & ideas for treatment as possible. Lots of brickwalls, I gather.  

I was wondering if David Brown might have any suggestions or contacts on this – or any ideas as to what he might do? David might find this client interesting in any event as he is a leading patent attorney & with some fascinating stories on technology.

To the next Markets Now

Very best

David Fuller's view

Thank you for your detailed email and your considerable interest in our Markets Now seminars.

Market setbacks are often volatile, which can certainly make them more stressful, even if one has seen them coming.  The pressures encountered are inevitably increased if you have clients who are seeking guidance from you and you care for them, as you obviously do.

I could not reproduce the long-term investment trust chart which you provided but it does include the bull market since 4Q 2008.  It looks orderly on the chart of almost 20 years but we know that most bull markets are punctuated by a few market corrections. These setbacks are often healthy for the overall trend because they blow off some of the speculative froth and generally lower valuations, as your books by Edwards & Magee and John Murphy will have pointed out.  However, this process seldom feels comfortable at the time and even temporary profit erosion creates anxiety.  

What do I think?  Friday’s action on Wall Street was encouraging.  Another selling squall followed the disappointing jobs report, increasing the short-term oversold condition, and strong demand then reversed the decline, as you could see on the daily charts that I included last Friday.  This was certainly the strongest rebound since 24-26 August, and we now have a higher reaction low on most of the US indices.  Yes, we are still in October, the last month of the May to Oct. period of seasonal underperformance, on average.  Nevertheless, panic dissipates in a corrective phase which is no longer reaching new lows.  Therefore, the odds that we have reached sustainable lows are increasing.    

Regarding Lyme’s Disease, I have been aware of it for decades although I had not heard John Caudwell’s family story but here is a YouTube video of him talking about it.

David Brown remains involved with medical research, as you probably know.  I obviously cannot speak for him but he is likely to see your comments, and other subscribers may also have some insights on this frightening and apparently still incurable illness.