"We are all feeling around for a market bottom and having been surprised at the weak nature of the bounce so far. It caused me to reflect on a couple of soft [contrary] indicators.

In the money section of the Sunday Times 2 weeks ago there was an article asking if now was the right time to buy the market? Today I came across this article entitled "Sharp rise in share buys".

"In addition to the above many of the stocks I own, although oversold by many measures, are some way above support levels and below resistance levels. The significant rise in yield for junk bonds does not make for a promising backdrop for equities.

"Unfortunately, I can't quite believe what I see before me and have not acted as yet!"

Eoin Treacy's view Thank you for this illuminating email which helps to reflect widespread uncertainty in response to the sharp declines experienced by most equity markets earlier this month. I reviewed the FTSE-100 on Thursday and little has happened since to change my view.

Of the four conditions I outlined to indicate a return to medium-term demand dominance, the UK is still lacking 2, 3 & 4. The S&P 500 posted a higher rally high yesterday, fulfilling the 2nd condition. The Nasdaq-100 has done substantially better and is now testing the under side of the 200-day MA.. As I have pointed out on successive occasions over the last month, companies with solid utility-like cashflows and those offering more exposure to the growth of the global middle's spending power are holding up best in the current environment. The former for their yields and the latter for their cash-flow, growth potential and global diversification.

Supply and demand have come back into balance at least temporarily. Shares with attractive characteristics such as those outlined above are outperforming on a relative strength basis and some on an absolute basis. However, the financial sector remains weak. Brent crude, grains and bean prices are still too firm for comfort. Greek sovereign spreads hit new highs last week and Ireland is the only one of the other Eurozone's troubled peripheral countries whose spread continues to contract. US treasury yields also continue to price in a rather pessimistic view.

There remains room for an additional rally which would help to unwind the short-term oversold condition. However, the majority of indices have experienced severe technical deterioration. Time is now required for them to demonstrate that they can build support and hold a rally. The ranging activity characteristic of support building tends to be volatile suggesting that there is no need to rush in and there should be opportunity to participate on more favourable risk-adjusted terms.