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South Korea (KOSPI) (p&f, weekly & daily) is testing its highs for the fourth time in a range which dates back to last September. Initially, this sideways activity represented mean reversion towards the rising 200-day moving average and KOSPI has remained above this trend-smoothing device during most of this pause. A close beneath 1650 is now required to offset higher scope over the short to medium term and to reaffirm resistance near current levels.

Malaysia (KLCI) (p&f, weekly & daily) could be nearing the end of its mean reversion consolidation and a close beneath 1290 would be required to indicate more than short-term resistance near this year's former highs. The orderly p&f advance is a useful trend guide and an eventual lower low will provide the next important warning signal, just as we saw with the unbroken progression of higher reaction lows in the last cycle, until January 2008 when the first lower low occurred.

Singapore (FSSTI) (p&f, weekly & daily) has also seen a lengthy mean reversion consolidation towards the MA, which appears to be nearing completion. The Index surged today following a brief pause and a close under 2930 would be required to indicate more than temporary resistance from the psychological 3000 level and the April peak.

Refresher on point & figure trend consistency - The Fullermoney p&f charts sometimes provide very consistent trends where major moves occur, up or down. If you know what to look for you can see this with a number of these p&f charts, including for Singapore immediately above. The crucial factor in an orderly uptrend will be the sequence of higher reaction lows, indicating that demand is coming in at progressively higher levels following the inevitable reactions and consolidations. When a sustained period of higher reaction lows in an uptrend, or a series of lower reaction highs in a down trend is eventually interrupted, you will know that the supply / demand imbalance which created the trend has changed, at least temporarily.

At TCS, we also teach that trends often begin to lose their consistency at penultimate peaks or troughs. You can see this with Singapore as lower lows during a bigger setback in July 2007 provide a warning, followed by a more dramatic lower low in November of that year following the lower high just beneath the actual high. Similarly, the sequence of lower highs commencing at 2940 in July 2008 was eventually interrupted by a higher high in December 2008. The penultimate low in October of that year was followed by a final low in March 2009 and a much bigger advance confirming the change in trend.

Was the lower low in May 2010 a warning that at least a penultimate high had been seen? Theoretically this is possible but probably not since the lower low consisted of only one unit of scale (35 points). Incidentally, a persistent sequence of higher reaction lows in an uptrend or lower reaction highs in a downtrend, where these occur, will not become apparent until the trend is well advanced. However that is when you need the information for monitoring consistency and identifying the eventual trend ending as that consistency eventually wanes.

Germany (DAX) (p&f, weekly & daily) shows another lengthy mean reversion towards the rising MA. With the overall bias remaining upwards, albeit very gradually for a number of months, a close beneath this week's reaction low just above 5900 would be required to reaffirm resistance above 6200 and further delay medium-term scope for an upward break.

Sweden (OMX) (p&f, weekly & daily) remains one of Europe's stronger markets in this recovery cycle. The p&f chart shows a sequence of eight higher to equal reaction lows since the November 2008 low. A break in this sequence will be required to question the overall upward bias. The lows are rising once again and looking at the daily chart, a close beneath 1015 would be required to reaffirm more that temporary resistance from the highs during their current test.