"You have been very prescient about the recent mean reversions of far eastern stock markets and are now suggesting that a pullback is likely in US stock markets.

"If that happens is there any evidence to help predict whether your often mentioned "Wall Street Leash Effect" would further depress far eastern and Indian stock markets? Or might cash released from Wall Street be redeployed in the East? I am thinking of timing an investment in those parts.

David Fuller's view Thanks for a challenging question, certain to be of interest to many readers.

The short answer is that it is currently all about crude oil, but you may also be interested in the longer answer:

There are likely to be numerous examples to support either a bullish or bearish answer to your questions, without necessarily advancing our forecasting ability in today's environment. Therefore the honest answer is to say that we cannot know for certain. Anyone who claims otherwise is either shooting from the hip or relying on faith-based analysis. The best we can do is look at the current influences on sentiment, and monitor the charts.

I think that crude oil has replaced agricultural commodities as the main concern for investors today. You may recall that for a number of months this site repeatedly described commodities as an opportunity likely to become the next problem. That problem arrived with food shortages and riots, and escalated when uprisings in the Middle East drove the price of crude oil sharply higher.

Consequently, we are currently in an environment where a rising price for crude oil and other commodities is likely to be seen as bearish for all stock markets, not least because it is rightly viewed as a tax on GDP growth for oil importing countries. Conversely, if crude oil and other commodities were to settle down in a range somewhat below today's levels, stock markets would most likely be firmer, discounting additional growth and higher corporate profits.

In conclusion, I think the combination of rising oil prices and mean reversion by the S&P 500 Index towards its 200-day moving average would represent a considerable headwind for Asian and Indian stock markets, even though they have already experienced medium-term mean reversion corrections. Weakness on Wall Street, regardless of its causes, is usually a headwind for equities generally. However, once the US stock market loses downside momentum, let alone steadies, in the absence of other major concerns the stronger growth markets in the Asia Pacific region should outperform once again as they are no longer overextended.

Lastly, we remain bullish of Fullermoney secular themes for the medium to longer term. We have always preferred to buy these following setbacks. Conversely, the time to lighten any of these positions is when they have surged above their medium-term trend means, represented by the 200-day moving averages.