David Fuller's view

This was very good news for bulls, and technically, it occurred where one would expect / hope in a bull market environment – near the 200-day moving averages. 

Here are some examples, starting with Europe: DJ Euro STOXX 50, Germany, France, Italy, Sweden and the Netherlands.  Does this mean the correction is over?  It probably does, given the short-term oversold condition, not to mention ongoing QE from the ECB of €60bn a month.  However, this is Europe and the negotiations have been tortuous, so watch the lows of the last two weeks – they need to hold.  Additionally, the season of stock market underperformance, on average, lasts from May through October. 

How about Asia?  Japan is the other big beneficiary of QE.  The Nikkei 225 is somewhat overstretched in the short term, albeit within what I maintain is a secular bull market.  Support has been encountered at the psychological 20,000 level and the leading TSE2 Index extended its advance.  Nevertheless, the risk of another temporary reaction and consolidation is increasing.  India’s Sensex Index is back above its 200-day (40-week) MA, but needs to maintain a push above 28,000 to break the progression of lower rally highs. 

What about the USA?  It has not done much this year because of the strong Dollar Index, albeit off its highs, and this has weakened corporate profits of Autonomies.  There is some negative divergence by Transports and Utilities, which remains a concern.  In contrast, the Russell 2000 and Nasdaq Composite Indices are extending their bull markets.  Lastly, the runaway Nasdaq Biotechnology Index remains in form and would have to close beneath 3700 to indicate an upside failure.