David Fuller's view Global stock market indices experienced a sell-off in May and early June. This created oversold conditions and became somewhat climactic, as we discussed at the time. The subsequent technical rally following a low for the S&P 500 Index on 4th June has at least partially corrected the oversold condition and pushed short-term indicators to overbought levels. You can see this from stochastic indicators in the customisable 'Charting' section of the Fullermoney Library.

Using the 'Tracking On' function when in the Library, and a weekly chart of the S&P, you will see that a small sell-off also occurred in May 2011, although this carried well into June before last year's high was retested a month later. It held and the subsequent decline in August was considerably larger. Moreover the S&P did not bottom until early October. Back then, and also recently, Greece was a major cause of concern.

The question that we are pondering at Fullermoney, and which will have also occurred to many other strategists and investors, is: Could this be déjà vu all over again, or might we have seen more than a short-term low this month?

What makes this analysis challenging is the volatility that we have seen, relative to the 2003-2007 bull phase. You can see the difference on this 10-year chart of the S&P. Nevertheless and returning to the current cycle since March 2009, you can see that the major reaction lows are still rising, as are the highs. In the short term, the S&P has rallied up to a level where it encounters potential resistance from the trading range evident above 1360.

Plenty of people are bearish, which remains a contrary indicator, and some are predicting a bear market. OK, any view is in with a chance but that cannot happen without a sustained break of the early-June low near 1265. This is unlikely to occur without a catalyst and what makes this a difficult call is that we do not have to look far for candidates. For instance, I do not think it will be Greece, at least not now, but a bigger problem could be Spain's need for a bailout and the risk of contagion spreading to Italy and beyond. Hopefully, the proposed launch of the European Stability Mechanism (ESM) will mitigate this risk, but we will have to wait and see because there is little precedent.

Meanwhile, how do some other stock markets around the world look technically?

Starting with relative strength, South Africa (weekly & daily) bounced from its 200-day MA and is the first stock market to reach a new high following last month's shakeout. It may consolidate above 34,000 but a break of the recent reaction low near 32,730 would be required to reverse current scope for higher levels over the medium term.

ASEAN leader Malaysia (weekly & daily) also bounced from the MA and is testing its highs near 1600. It broke upwards last July and then promptly flopped. The valuations are better today but the early-June low is now extremely important, as it is for most other stock market indices. The Philippines (weekly & daily), Indonesia (weekly & daily) and Thailand (weekly & daily) continue to show global relative strength although JCI has a broadening pattern so the recent low is particularly important. With what is primarily a financial sector economy, Singapore (weekly & daily) has lagged and needs a new high for the year to confirm fully support from the 2011 trough.

China (weekly & daily) is having its Godot moment; needs to maintain this year's progression of higher reaction lows and a sustained push above 2600 remains necessary to confirm recovery prospects.

No market rivals Japan (weekly & daily) in terms of 'Waiting for Godot' but it has bounced from the range lows and a close beneath 8420 would be required to delay significantly scope for sideways to somewhat higher trading. A firmer USD/JPY (weekly & daily) rate, which appears possible, should aid Japan's eventual stock market recovery.

Australia's ASX200 (weekly & daily) steadied at the bottom the current range, which is also near the upside breakout point from the 2009 base. A close beneath 3980 would be required to delay current scope for sideways to higher ranging within this lengthy base formation extension.

For the UK (weekly & daily) this month's higher reaction low causes the overall ranging pattern to look less top heavy but supply evident above current levels may impede further upward progress for a while longer.

Within Euroland the STOXX Bank Index (weekly & daily) has steadied this month, following a small key day reversal at the low. Higher ranging is required to prevent this Index from remaining a headwind for Europe's broader indices. Germany (weekly & daily), following a climactic decline which carried just below 6000, has seen its best rally since the March high, suggesting that a support building process is now underway. A close beneath the early June low near 5925 would be necessary to offset current scope for sideways to somewhat higher ranging.

Conclusion - Watch for a consolidation of recent gains but thereafter continue to give a ranging recovery the benefit of the doubt provided this month's lows continue to hold.