For the last 5 months we have been waiting for the market to bottom, we believe that this bottom is now in.
If you take a look at the below chart you will notice that since the low of August 2011 the market has twice fallen back to and established higher lows.
This has on the most part been due to the European Bond Crisis; with the announcement last week by the central banks that they will now start to support banks and pave the way for a free flow of cash the market has made a significant recovery.
I expect to see the market continue to rally from here... and in the short-term (next 3 month) move back above 4500 and towards 5000 points.
Our view is that fair value for the market is between 5000 and 5200 points.
It is not all-good news, as I still expect that the volatility will remain in the market for the next 2-3 years before we start to see stainable growth return.
Investors need to be careful in the current environment as they can easily get caught between and economic down turn and a recovering market.
A recessions is still likely but history has shown us that the market will recover 12 months on average before the recessions is over.
There are some good gains to be made during this time.