We are uncomfortable taking a bullish stance when the newspapers are full of dire warnings about the risk of being in equities, or the terrible calamities attending our pension providers. Yet these are necessary conditions to profit from an unexpected rally. Intuition and experience are the main guides at this point: the real reasons why it is right to be bullish when markets turn only become apparent some time later.Given that the market is at what I take to be a potential turning point, I was interested to read the comments this week of David Fuller, the technical analyst whose views I monitor on a regular basis. He said this week: “Every technician knows that stock markets are at a critical juncture,” (which can be translated as saying “none of them is confident about which way they are heading next”). He adds: “The medium technical rally does not appear to be over on the basis of any actual market evidence.” If it was, we would not still be seeing up-days that are stronger than down-days: or the market failing to go through its previous lows.Two other indicators suggest to me that the market rally has some staying power. One is the strength of smaller company shares, which usually lead the way out of bear markets, though the fact that they show strength does not infallibly mean that a bear market is over.

The latest monthly statistics from Standard & Poor’s show that the average UK smaller companies fund was up by nearly 12 per cent in April; and the average European smaller companies fund was up by just over 10 per cent.Looking at the three and five-year data for fund performance, the performance tables are dominated by gilts, other types of bond and property. It would be astonishing, going on impossible I would say, if the performance tables in either three or five years were to show a similar picture. Quite which category of asset will be on top then I have no idea, but the odds must now favour equities again making a reasonable showing in relative terms.As for the rest of this year, another well-known phenomenon noted by Mr Fuller is that stock markets rarely do badly in the year before a US presidential election, for reasons that are not hard to find This one looks like being no exception. At the start of May all the major US market indices were above their end-2002 levels The old market adage says “sell in May and go away”. There will be further bad patches this year, for sure, as no market recovers in a straight line, but this may be one year when even that hoary old chestnut does not hold true either.The second indicator that has caught my eye in recent months is the number of highly savvy professional investors who are venturing back to the market, having sold their firms, or simply retired from the fray, during the last legs of the great bull market in 1999-2000.

I know of at least five professionals I would put in this category who are starting new ventures. The way to judge their real feelings for the market is not by listening to what they say, but by looking at what they are doing to earn a livelihood. The omens on this score are also starting to turn more positive, it seems.davisbiz aol . Who’d have thought it, the FTSE at 4,000 or thereabouts? Quite a fillip, really.

And there are other interesting things going on in the market, although they provoke contradictory emotions. Sweet, because the exercise usually means a decent lift to a bombed-out share price, and confirmation that at least someone out there shares your judgement about the underlying merits of a company. The bitter bit comes when you realise that some other guy is going to squeeze the potential, and the value, out of your undervalued company. In other words, you, the small investor, after going through the pain of missed dividends and a slump in the share price, are going to miss out on the sunlit uplands.So my faith in James Brown’s inspirational leadership of I Feel Good (publisher of the excellent Viz and Jack) has just been repaid by having my small share of the company bought out by the mega-rich publisher Felix Dennis I think I’m about quits on my holding.