David Fuller's view

Japan’s Topix 2^nd Section Index is a lead indicator which is signalling that the lengthy consolidation of last year’s strong gains is now supporting higher prices.  It is also becoming overextended once again relative to its 200-day (40-week) MA but another similar sized reaction which found support near the MA would reaffirm the overall upward trend.  Japan’s Nikkei 225 would have to close beneath 14,700 to delay significantly an upward break.  Weaker USD/JPY is a catalyst for Japan’s strengthening stock market, and there is now more than enough underlying support to clear the ¥105 level after a brief pause.

China’s Shanghai A-Shares Index is testing the last two highs in this region but this time there is more underlying support evident beneath current levels.  A close beneath 2290 would be required to indicate more than a brief pause now that the recovery has resumed.  The Hong Kong Hang Seng Index led this rally but is currently underperforming near 25,000 and the important 2010 high.  China’s hard-line political policy towards Hong Kong has also contributed to some temporary weakening.

Vietnam’s Stock Index reacted sharply last April to China’s territorial aggression regarding offshore drilling rights.  These tensions are a periodic hazard but would have to be considerably more serious to derail significantly Vietnam’s recovery potential indicated by this longer-term chart with its extended base formation.

Brazil's Ibovespa Index continues to power ahead and is also approaching the next area of potential psychological resistance from the last two peaks near 63,500.  However, the combination of a downward dynamic and pullback clearly larger than those seen since the March low would be required to indicate more than a short-term reaction and consolidation.