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The Philippines (PCOMP) remains a global relative strength leader but is becoming a little overextended relative to its medium-term trend mean represented by the 200-day moving average. Nevertheless a close beneath 3400 is now required to check current upside momentum and delay a further test of the 2007 top area.

Sri Lanka (CSEALL) accelerated far above its MA mean before encountering resistance near the psychological 5000 level and recording the biggest downward dynamic since this bull trend commenced. This indicates that a peak of at least near-term significance has been reached and a further mean reversion towards the MA is likely.

Vietnam (VNINDEX) has been a regional underperformer since its recovery high in October 2009. This monthly chart shows that Vietnam also lagged in the last bull cycle, following a 5-month rebound in late 2004 and early 2005. Given regional strength, this underperformance is probably a lengthy base formation extension phase. Watch for the next clear upward dynamic as a potential beginning of a catch-up run.

Hong Kong (HSI) had a very long pause in 2004 and 1H 2005 and the current price action may indicate a similarly lengthy consolidation. Certainly the ranging pattern is looking less toppy today and mainland Chinese indices are no longer providing a headwind. A downward dynamic is now required to delay current scope for a further test of the upper boundary.

Spain (IBEX) had a torrid time during the Southern European debt crisis awareness phase. Understandably, it is still an overall underperformer but found support within its base in June when an upside weekly key reversal signalled the onset of a bear squeeze. A second upward dynamic occurred a month later and IBEX is now above its MA once again. A close beneath 10,000 is now required to significantly delay a further test of overhead trading.

Germany (DAX) has one of the best patterns within Europe and the lengthy consolidation shows a sufficient build-up of support to sustain a renewed advance in coming months. A close beneath 6240 would be required to delay current scope for an upward break.