"Remember the long term chart of Dow Jones you admired, well Rydex SGI have updated the numbers to 31st December 2009. I thought you might like to share this with the collective."

David Fuller's view Many thanks. This will be appreciated by all of us who remain students of the markets.

Labels can be mystifying. Since 2000, I have periodically referred to a secular bear market on Wall Street, which I defined as a rolling contraction in p/e ratios and an increase in yields. To avoid confusion and in the interests of clear communication with newer subscribers, I now prefer to refer to this period as a valuation contraction, which will be rolling rather than linear.

Within this phase depicted in red on the Rydex SGI chart, we can also see the cyclical bull market from 2003 to 2007. I maintain that we are in another cyclical bull market which commenced its base building phase as the 2008 bear market began to bottom out in October of that year.

However, some strategists still refer to last year's rebound as no more than a bear market rally, destined to be followed by a Wall Street decline beneath the March 2009 lows. If they are right, and this outcome is in the medium-term rather than distant future, then the recent correction is unlikely to be over.

The Fullermoney view has maintained that the cyclical bull for major stock markets would be punctuated by at least one mean reversion correction towards the rising 200-day moving averages, and that these events would be buying opportunities. However we are not a faith-based service, so technical evidence is always required to reaffirm our views. With corrections, which inevitably cause some short-term technical damage, clear evidence of additional upside scope only becomes apparent as stock markets firm once again.

I mentioned recently that leading share indices had reached 'a moment of truth' in testing the region of their rising MAs. We have seen indices lose downside momentum near those levels, and also in response to a short-term oversold condition which is now being unwound, but we lacked upward dynamics which provide the clearest evidence that demand is returning following a correction.

To date, recovery signals have lacked the dynamism and clarity of what we saw last July. Nevertheless, they are improving with Wall Street's steadier performance evident from these daily charts of the S&P 500 and the Nasdaq 100. Today, we saw some upward dynamics in the Asia Pacific region, which I would normally expect to be among the leaders. You can see this with the main indices for Australia and Japan. Singapore, which did see an upward dynamic off last week's low has now pushed above its previous small trading range formed during the correction. Indonesia, the earlier upside leader for Asia has recovered half of its recent decline. Elsewhere, Brazil has shown some upward dynamics and is testing its recent lower high today, as is the UK.

This evidence is not yet sufficiently strong to convince bearish factions and become conclusive. Therefore we should not be surprised to see some further ranging. Nevertheless, recent activity tends to favour the bullish hypothesis. Closes beneath the recent reaction lows would be required to challenge this conclusion.