Over the past 60+ years, the largest amount of multiple expansion occurs when earnings growth is slowing, not when it is accelerating. Additionally, multiple expansion tends to coincide with periods of rising consumer confidence. With earnings growth forecasted for 2014, we could see a strong fourth quarter rally after a period of consolidation as the market digests further uncertainty regarding Fed tapering.
September and October have often provided investors with a better buying opportunity. With the Delta MSI bullish, we recommend using market weakness between now and the final months of the year as an equity buying opportunity.