This has also helped push the dollar back up against the euro.So the great bear market is over then? Of course no one can know until long after the event but in the last few days just enough cheer has crept into the markets for some of the professionals to risk suggesting that this might be so. It is certainly true that bear markets rarely last longer than two years. This one, depending on which index and which market you take, has already been nearly, or a little over, two and a half years long.But before you get too excited – or relieved – I thought it might be helpful to put the case for caution; or rather, two of the less common such cases, both of which focus on possible problems over the next couple of months.Most of the comment on the markets, here as elsewhere, has been about the level of the market when measured by conventional valuations: the value of company price/earnings ratios, for example, or the market’s bond/equity yield ratio. But while these can tell you whether shares are expensive or cheap by historical standards and so are valuable on a five or 10-year time horizon, they are less use in the short-term.So here are two ways of looking at the next few months.

One is to look at the different months of the calendar and see how shares perform. Most people are aware of the old adage “sell in May and go away” and more recently Goldman Sachs has drawn attention to the January effect: the way shares tend to go up in the first month of each year. But I am grateful to Don Straszheim, of Straszheim Global Advisors, for pointing out that September is measurably the worst month of the year for shares, while November, December and January are the best ones You can see the results of his research in the table. This shows what has happened on average each month to the Dow and the S&P 500 since 1950, and to the Nasdaq since 1971.As you can see, both the “sell in May” and the year-end surge rules are generally correct.

So one should indeed sell in May (or even April) and buy back in October And it is best to be out of the market in September. Were you to follow those rules you would on average gain three or four percentage points a year, even allowing for some transaction costs, on the index. Over 10 or 20 years this is huge.So why don’t more investors follow these rules? None of the obvious explanations stack up – shares being sold for tax purposes for example – and Mr Straszheim wonders whether we just lack imagination. But the record does cast a certain cloud over the currently more sunny mood. There have been four “bottoms” to the US market already, each lower than the previous one (left-hand graph). The first three were clearly false bottoms; there is no reason why the fourth should not prove a false one too, though if it were, that would be pretty unusual.The other reason for caution is the view of the chartists. The chartists, or “technical” analysts as they prefer to be called, rely on the patterns that charts make to predict where markets might go.

To anyone with a scientific background this form of analysis is not technical at all, more black box with its “double bottoms”, “neckties” and “head and shoulders” patterns. But the charts do seem to capture human behaviour and as such provide a helpful guide to short-term price movements.So what are the chartists saying? Here I am grateful to the HSBC technical team. Their view, looking at world equities is that the present rally should last until the end of the month but then it will be time to sell again.”This is not the final low,” they write. “Expect new lows in late October.”This goes for the UK market as well as the US one, though the UK market has been improving relative to the world since the middle of 2000 We have gone down but not as much as the rest of the world. Not fully understanding quite how these people reach their conclusions, I can’t fully explain why they are so certain But it sort of makes sense. Intuitively it feels as though there has not yet been the bleak despair, the “capitulation”, that typically characterises the bottom of a bear market.True, most of these go-go New York analysts who puffed the telecoms shares during the bubble years have now been rusticated.