"Following on from my e-mail a couple of weeks ago where I discussed the importance of the banks rallying and in particular the Eurozone banks if we were to see an important low in August. Thanks to Eoin for the review of banking shares and banking indexes worldwide the other day this really underlined the point. The key day reversal on 13 September in the December Eurozone banks contract didn't see enough follow through and the macro backdrop deteriorated, yet again pushing the index lower but not to a new low. The only thing to be said was that we did see a loss of downward momentum. Friday 23 September saw another key day reversal off a similar low to the previous one. Today it is following through! If it can get above 105 (Eoin mentioned this level in an audio and I agree) and hold, in combination with the August lows holding in some key indexes (especially S&P 500, FTSE) and the NASDAQ hanging in there just above the low of the overhead trading range on Friday, a medium term low could be in play. I am writing as of 11:30 am London time, too early to say but I am hopeful and will begin to nibble in here today with a tight stop! To the European leaders let's see the "beef"!!!!"

Eoin Treacy's view Thank you for this analysis which I'm sure will be appreciated by subscribers. I agree that much still hinges on strong leadership from Europe's politicians. Angela Merkel's commitment to "avoid a disorderly default" appears to have been construed as a commitment to ensure an orderly default given the heightened spreads over Bunds evident across the Eurozone sovereign bond market. The Eurozone's banking sector is likely to need recapitalisation regardless of any potential Greek outcome. The French and German governments remain likely to make the necessary sacrifices to ensure the survival of their respective banking sectors.

Friday's marginal key reversal saw some follow through today. A short-term aim will be to sustain a move back above 100. The Index remains deeply oversold compared to the 200-day MA which makes the case for reversion more compelling, but a sustained move above 105 will be required to break the progression of lower rally highs and to suggest demand is returning beyond the very short term.

The S&P 500 Index continues to range below the overhead top formation and has bounced somewhat from the lower side today. The 200-day MA has turned decisively downwards and a sustained move above 1250 will be required to begin to suggest a return to medium-term demand dominance.

The Nasdaq 100 Index is one of only a handful of indices to have pushed back up into the overhead trading range. It has posted a short-term progression of higher reaction lows since early August and rallied impressively from each successive low. Friday's rally was characteristic of those posted over the last six weeks. It will need to hold this sequence if the short-term bullish outlook is to be sustained while a move above 2300 sustained for more than a day or two would be required to indicate a return to medium-term demand dominance.

The FTSE-100 Index has been ranging in the region of the 2010 lows since early August. This congestion area has been volatile and at least short-term support has recently been found at the lower side. However a sustained move above 5500 will be required to suggest a return to medium-term demand dominance.

All three of these indices have experienced considerable technical deterioration over the last two months. They have all steadied in the short-term but significant price appreciation will be required to offset potential that the current ranging represents distribution below their top formations rather than support building.