David Fuller's view China's Shanghai A-Shares Index (weekly & daily) formed another upside key day reversal today following an overstretched decline. The key suggests that at least a technical rally has commenced, as we saw following the two upside keys in October. However, a break in the progression of lower rally highs, currently requiring a rally above 2660 is necessary to snap the medium-term downtrend. This is not an unreasonable prospect in the next few months given the overall extent of the decline and proximity of the 2008-2009 trough.

USA's S&P 500 Index (weekly & daily) has retraced approximately half of its late-November to early-December rally. Psychology, the November low just under 1160 is important because the S&P currently shows a higher reaction low. A breech of that level would reaffirm once again that supply still has the upper hand. Conversely, evidence that demand is returning beyond short-lived rebounds requires a push back above the early-December to late October highs and also the 200-day MA.