David Fuller's view The Philippines (weekly & daily), Indonesia (weekly & daily) and Thailand (weekly & daily) became increasingly overextended relative to their trend means, approximated by their 200-day moving averages, during the second quarter of this year. They peaked in May and fell sharply in a mean reversion process, before commencing sharp rallies on Wednesday. Further near-term gains may be more difficult to maintain, because big overextensions relative to 200-day MAs within what have been clear overall upward trends, are signs of euphoria and therefore difficult to sustain over the short-term and also often the medium-term as well.

Singapore's Straits Times Index (weekly & daily) has seen some loss of downside momentum but so far this is only a modest improvement following the 5-week slide. A close above the last 3-day rally high near 3240 is required to provide further evidence that a low of at lest near-term significance has been reached late last week and earlier this week.

India's Sensex Index (weekly & daily) has checked its 5-week slide with a weekly key reversal, and it also saw an upside breakaway gap on the daily chart. Consequently, closes beneath 18,500 are now required to offset some further recovery within the current broad trading range. Note: today's oversold rally was boosted by energy reforms.


China's Shanghai A-Share Index (weekly & daily) accelerated to its lowest level since January 2009 on Tuesday. It has steadied and should see some further recovery in response to the large decline which commenced in late May, despite all the uncertainty.

Japan's Nikkei 225 (weekly & daily) lost downside momentum in June and closed at its highest level for the month today. It is still well above its MA, but a lot less so than in May. A close beneath 12,430 would now be required to offset current scope for a further ranging recovery. Japan remains the most promising major market, thanks to Abenomics, particularly if the Japan Topix 2nd Section (weekly & daily) can reassert its earlier relative strength.

Europe's Euro STOXX 50 underperformance (weekly & daily) is reaffirmed by the fall to its lowest level of the year on Monday. Nevertheless, a close beneath 2490 is now required to signal lower scope and offset current prospects for a potential downside failure and extension of this year's trading range. Worryingly, the Euro STOXX Bank Index (weekly & daily) remains weaker and is barely steady above lateral support near 100, dating back to September 2012.

The S&P 500 Index vs MSCI World Free continues to show the outperformance of the US stock market since 2008. However, it may be in a latter stage of this relative strength as the top area around the turn of the Century is approached. Nevertheless, a break in the progression of higher reaction lows will be required to signal the next likely reversal phase. Similarly, albeit in reverse order, the MSCI Emerging Markets vs S&P 500 Index, shows that the former sector has accelerated lower recently. Consequently, the first rally in excess of the last one shown since the current downtrend commenced in mid-2010, is likely to mark the onset of a significant change in relative performance.