[[Start here]] → [[Journals]] → 2023-09-12 --- It’s now been more than two years since the FTSE AIM All Share topped and began its downtrend. This is the index that best captures the interest in the more speculative end of the UK small cap market. As such, it’s a useful barometer of sentiment, and especially animal spirits. The weekly chart illustrates the malaise, more than 43% down since the top. It remains below its 30 week moving average price. My timing model triggers a buy signal when it rises above this moving average. A temporary signal triggered in January, but it failed a few weeks later. ![[2023-09-12-ftai.png]] When dealing in speculative small caps, it’s best to [[sell stocks when the market trend turns bearish]], but that time has long since passed. The initial signal was triggered in late September 2021 as the index moved below its MA, and proved yet again to be an accurate forecaster. My view is that new investors should wait until the market trend turns bullish before buying new positions. If you find yourself in cash, there’s no rush. Wait for the trigger and [[maintain your discipline]]. You are likely to miss the bottom, but you’ll be buying in at a lower risk. It’s best not to catch falling knives. Even this month, [fund flows data from Morningstar](https://portfolio-adviser.com/morningstar-fundsmith-equity-suffers-redemptions-as-fixed-income-remains-only-popular-asset-class/) showed that UK equities are still seeing outflows, in spite of extremely low valuations, another £1.3bn was pulled from UK funds in July - a further 0.4% fall. This is still hitting small caps disproportionately. Further to this, the lack of new listings is hurting small cap brokers. [Arden Partners](https://zeuscapital.co.uk/arden-partners/) went under and was acquired by Zeus Capital, while [WH Ireland made an emergency placing for £5m](https://www.ftadviser.com/companies/2023/07/28/wh-ireland-raises-5mn-as-it-battles-losses/) as it almost collapsed due to losses. These kind of issues are crippling research into the small cap space. Morningstar reported that even in the £500m to £1bn mid cap space there used to be 11 analysts per stock, now there’s only 5. And as we’ll all know in small caps, there are regularly no analysts at all. The good news is that the government’s [Investment Research Review](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1168719/UK_INVESTMENT_RESEARCH_REVIEW_-_RACHEL_KENT_10.7.23.pdf), led by Rachel Kent, may well lead to a rolling back of the Mifid II regulations that have crippled research into small caps. The proposals have apparently been accepted by the government, and there’s a rumour that the government may end up funding several analysts for every stock in the market. Let’s see what the budget brings. If there’s a strong announcement regarding improving the equity market environment, and especially funding investment research, it could mark a turning point.