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When to buy Aim stocks

Right now, however, the index is sending a buy signal. I say this because it has risen above its 10-month moving average* - a fact which has in the past led to good returns. We know that the rule "buy when prices are above their 10-month average and sell when it is below it" works for the All-Share index, some sectors and for gold. It also works for Aim.

To establish this, I ran a simple test. I took monthly changes in the Aim index since January 1997, and split them into two groups: those months which followed the Aim index being above its 10-month average at the end of the previous month, and those which followed the Aim being below its 10-month average.

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