The Federal Reserve and European Central Bank (ECB) disappointed markets last week by not announcing further monetary stimulus following their scheduled meetings. The Fed reiterated it "will provide additional accommodation as needed," implying that economic and financial conditions would have to worsen further to get them to act. Expectations were greater for the ECB to resume sovereign bond purchases of financially-stressed governments, especially in light of President Mario Draghi's high-profile statement "to do whatever it takes to preserve the euro" from the previous week.

David Fuller's view It is a sign of the times that a highly-regarded US investment management letter is devoting most of its copy to the Eurozone, as we see again with this issue. Interestingly, Eurozone stock markets have seen some of the biggest rallies recently, not least the beleaguered Euro STOXX Banks Index (weekly & daily) which is reverting back towards its trend mean approximated by the 200-day MA, following a downside failure.

It would not be surprising to see some temporary resistance near current levels. Nevertheless, the extreme decline and forceful rally in the last three weeks, albeit with the help of short covering, suggests that a low of at least near-term significance has been seen. Moreover, the ECB's recent moves might just mark a pivotal moment in the European banking crisis, although many problems clearly remain.