Eoin Treacy's view By mid-March 2009, the majority of stock market indices had begun to rally and by June had unwound deeply oversold conditions relative to their moving averages. Some of the leaders which had bottomed in October and November 2008 were even looking a little overextended in the short-term. The aim of the report was to point out that a large number of markets had rallied impressively and that while the debate continued as to whether the rally was the beginning of a new bull market or merely an impressive bear market rally, a number of indices were already pushing onwards to new recovery highs.

Today we have a relatively similar scenario. Most indices have been consolidating for a number of months and in the process unwound overbought conditions relative to their moving averages. An increasing number of indices are breaking upwards to new recovery highs. Some of the leaders have already retraced the entire bear market decline and are setting new all-time highs. A tiny handful of relatively insignificant illiquid markets are posting new lows.

Here are some of the highlights evident from this data:

Argentina, Mexico, Colombia, Sri Lanka, Chile and Tunisia have all hit at least 5yr new highs this year.

Mexico, Colombia, Argentina, Indonesia, Tunisia, Chile, Sri Lanka, Israel, Turkey and Brazil are less than 10% below 5-year highs in local currency terms.

In US Dollar terms, the best performing indices from their respective lows are: Ukraine (+359%), Russia (+216%), Turkey (+208%), Indonesia (+205%), Hungary (+203%), Brazil (+198%), Canada's Venture Index (+189%), Australia S&P/ASX Resources Index (+179%), Peru (+177%), Poland (+176%), Norway (+163%), Hong Kong H-Shares (+159%). The Nasdaq-100 is in 56th place (+92%), Shanghai A-Shares 58th (+88%), FTSE-100 66th (+81%), Dow Jones Stoxx 600 63rd (+82%), S&P500 77th (+76%) and Japan Nikkei-225 82nd (+66%).

(Please note: I calculated the US Dollar values for the performance of the respective indices by taking the local currency current values, highs and lows, finding the corresponding spot rate on those dates and made the calculations based on those levels. This is not the most accurate method because it ignores the possibility that the index in US Dollar terms moved to a new high or low on a different day to the local currency equivalent. However, it is the most expedient calculation method and offers a sufficiently accurate representation to be useful in my opinion.)

An increasing number of indices are breaking to new recovery highs, the Wall Street leash effect is positive, monetary conditions remain accommodative, government bonds yields do not currently offer a significant headwind, oil is not accelerating higher, we do not have a Dollar crisis and inflation is not currently a problem. Some markets are somewhat overbought in the very short term but sustained moves below the ascending 200-day moving averages would be required to question the consistency of medium-term uptrends that continue to unfold.