David Fuller's view Have we just completed a perfect storm (in a teacup) for markets, following concern over China's incremental shift in bank reserve requirements and Wall Street's sulk over President Obama's call for the passing of what he named the "Volcker Rule" on regulation? Or are we at the beginning of something worse as central bankers and treasury officials attempt to steer their fragile economic ships through the current fog and between the Scylla of deflation due to overwhelming debt, and the Charybdis of future inflation sown by quantitative easing?

Stock markets are likely to tell us and I see three possible outcomes this year: 1) the cyclical bull markets resume; 2) stock markets are weighed down by the economic and policy conundrums; 3) they range erratically in zombie fashion.

I can only guess at the answer and subjectively estimate odds for each of the three scenarios mentioned above. However, the price charts should show us.

Subsequently, most stock markets extended their corrections, with sovereign debt concerns grabbing most of the headlines. If my most bullish scenario (1) is to prevail for leading stock markets and commodities, then I would expect the recent declines to be checked in the region of their rising 200-day moving averages, which Eoin and I have often referred to as the medium-term trend mean. Under scenario (1) conditions, support near the MAs, preferably in the form of upward dynamics, would be followed by recoveries back to and eventually above the earlier highs. Conversely, if most indices not only break beneath their MAs but also subsequently encounter resistance from the underside of those averages, which then flatten out prior to turning downwards, then scenarios (2&3) will have prevailed.

Today, many important stock market indices are close to a moment of truth in terms of their 200-day moving averages. Here is a partial review: China's Shanghai Composite Share Index decline paused following last week's upside key day reversal but it still needs to sustain a move above 3000 to indicate that demand is regaining the upper hand. China's H-Shares and Hang Seng Indices really do need to rebound from current levels if this is a normal correction. India's Sensex is now just above its MA. Singapore has a little more breathing space while Indonesia, the region's star performer to date, has at least corrected much of its overextension relative to the MA. If the others rebound soon, I would not be surprised to see Indonesia lead the region to new highs. The Nikkei 225 is testing its MA. Australia's decline has slowed just above its MA.

Here are some similar European examples: UK, Germany and France. However Switzerland, Sweden and Denmark have remained further above their MAs and can be expected to lead on the upside if a normal mean reversion correction is ending. In sharp contrast, Europe's main sovereign debt concerns - Greece, Portugal and Spain - are no longer scenario (1) candidates and are likely to remain underperformers. Ireland is doing somewhat better, although clearly underperforming Europe's leaders, and may be a candidate for additional base formation extension, which has already been a lengthy process.

There will be no scenario (1) outlook without the participation of the USA, in my view. The S&P 500 Index has held up reasonably well during this correction to date, despite rhetoric over the "Volcker Rule". The same can be said for Brazil. Canada has lost downside moment near its MA. Chile finally ended its gravity defying advance with last week's downside key reversal.

In conclusion, stock markets are now technically oversold, with many near potential support levels, not least the 200-day moving averages. However some technical damage has occurred, which is all but inevitable during market corrections of 10% or more. Incidentally, the S&P 500 Index's correction is 9.2% to date. If the correlation of assets seen over most of the last year holds, the bullish signal would be firmer stock and commodity markets and a softer US dollar.