Eoin Treacy's view
Today's interesting charts - The Chart Library has a large number of sector indices covering more than 20 countries which may be of interest to subscribers.

FTSE-350 Banks Index - pulled back from the upper side of the 10-month range but is now testing the 200-day MA and has held the short-term progression of rising reaction lows. A sustained move below 4700 would be required to question scope for some additional upside while a sustained move above 5400 would indicate demand has regained medium-term dominance.

Stoxx 600 Banks Index - the 10-month progression of lower rally highs remains in place and would need to be taken out to question scope for continued lower to lateral ranging.

Topix Banks Index - moved to a new reaction low today. The four-month progression of lower rally highs would need to be broken with a sustained move above 127 to question scope for additional lower to lateral ranging.

S&P/TSX Financials Index - The Index has been ranging mostly above 1450 since July 2009 and rebounded from that level last week. A sustained move below 1450 would be required to indicate medium-term supply dominance.

In conclusion the above indices indicate the G-7's financial sector remains underwhelming where it is not in outright contraction. Japanese and US indices are most susceptible to additional tests of underlying trading but all appear in need of a catalyst to spur investor demand which has yet to appear.


Asian M&A - The contrast between the economic performance of Asia, particularly ASEAN, and the G-7 is quite remarkable and has been discussed at length in previous comments. Companies in both regions have built up high cash levels and been slow to increase their capital expenditure. Any company will want to invest where they can get the best return and global corporations are increasingly free to allocate capital wherever they want. Given the marked difference in growth potential between the G-7 and much of Asia I believe there is a strong likelihood that Asia will benefit from increased capital expenditure by both domestic companies and globally oriented companies domiciled in the G-7. This could help to reinforce the divergence in performance between the two regions' stock markets.