Our Midyear Outlook introduced the concept of a tri-polar world, characterised by distinctive long-term economic outlooks among countries and regions based on policy choices, growth prospects and structural differences. Countries in our tri-polar world were put into one of three categories: the good, the not-so-bad and the ugly. Developing economies were 'the good' due to their low debt levels, modest labor costs, and potential for accelerating domestic consumption. 'Not so bad' developed economies (primarily the US, UK, Germany and Scandinavia) have greater flexibility, relatively productive work forces and aggressive, independent central banks. The 'bad' developed economies (southern Europe, Ireland, and Japan) are suffering from unsustainable debt levels and uncompetitive work forces, and will likely face a prolonged period of economic stagnation, in our view.

David Fuller's view Fullermoney has often described share selection as a global beauty contest. Who wants to own the ugly, unless they have lagged for so long that they look like recovery candidates, as in 'Dogs of the DOW'. However this works better within a single market.

Relative performance leaders usually lead in both directions, thus providing important timing clues. Here is what to look for.

When global leaders such as: Indonesia, The Philippines, Thailand, Malaysia, Chile and Columbia next break their current progressions of higher reaction lows evident on these daily charts, you will know that supply has regained the upper hand from the demand which has fuelled these advances to date.

When one of these consistently leading markets breaks its sequence of higher reaction lows, it will be a warning but it could also be an anomaly. When most or all of them break their short term uptrends defined by the higher reaction lows, you will have clear evidence signalling a loss of upside momentum of at least near-term significance.

If they lose upward momentum rotationally on light volume in narrow trading ranges, it may only signify a temporary pause, as we have seen in recent months.

However if the charts begin to show downward dynamics (large downside days) on heavier volume you will know that someone is unloading positions. Such action would suggest that a correction had commenced.

A lengthy trading range on top of the rather elegant and consistent uptrends would look top heavy, increasing the risk of a correction as investors lost interest and took profits.