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by Peter Switzer

Earlier this week, I referred to three reasons why a decent rally was in the wings. And today I will throw a few more logs on the fire.

In case you missed it, I pointed out that a golden cross had emerged on the market charts and this is a good sign that markets are poised to head higher. A golden cross happens when the 50-day moving average cuts above the 200-day moving average. History points to an upward market bounce after a golden cross.

Next the US mid-term elections historically have helped the stock market go north and these are held on 2 November and this is the exact time that the US Fed is expected to unleash QE2 or quantitative easing number two. The size of that easing will be critical to how the market reacts.

Adding to the positive pointers CNBC revealed that the Stock Trader’s Almanac has found over a four-year presidency, the best time for the stock market is the fourth quarter of the mid-term year and first quarter of the pre-election year.

That augurs well for 2011.

And ironically stock markets tend to do better with a Democrat president, who does not have control of the Congress, which looks likely after the mid-term election.

And have a go at this fact: “Over the last 70 years, in fact, such combinations on Capitol Hill produced an average annual return of 15 per cent or more,” CNBC reported.

By the way, the Almanac also shows that November to April is a great time for investors on the market. Over the past 70 years, the Dow Jones index has produced returns of around 7.4 per cent.

Of course, history can let you down, but given this was such an ordinary year on the stock market and throw in that US economic indicators are slightly improving, it’s not a long shot that an end of year rally could spark a nice start to 2011.

That’s my story and I am sticking to it.

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Published on: Wednesday, October 27, 2010