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Turkey (XU100) has shown an unbroken sequence of higher reaction lows since the 4Q 2008 to 1Q 2009 base. Currently, it is somewhat overextended relative to the trend mean depicted by the rising 200-day moving average (MA). The recent weekly key reversal (the red outside week on either side of the psychological 70,000 level) warns of some additional mean reversion towards the MA but there has been no downside follow through this week. Consequently, a close beneath 67,400 is currently required to signal an additional pullback before the present consolidation supports a resumption of the upward trend.

India (Nifty 50) has firmed within its present consolidation near the January 2008 peak and the psychological 6000 level. A close beneath 5940 is currently required to indicate some additional mean reversion towards the MA before the broader stock market follows the Bombay Banks Index in moving somewhat higher. Over the medium term, one can expect further mean reversion towards the rising MA.

Hong Kong (HSI) has resumed its upside breakout following a brief consolidation. A close beneath 22,950 is currently required to indicate an additional pause before underlying trading supports a further advance towards the 2007 peak.

Australia (AS51) has been held back by the strong AUD but this daily graph shows that it is breaking up out of the mid-September through October consolidation, evident mostly in the 4600 to 4700 range. A fall back to the lower region of this band would be required to offset current scope for a catch-up rally towards at least the April high near 5000.

New Zealand (NZSE50FG) has moved steadily higher since the upward dynamic from the 3000 level in early September and is now testing the April high. A downward dynamic would be required to indicate more than brief resistance in this region.

The United Kingdom (UKX) has broken above its April high following a consolidation and a close beneath 5630 would be required to indicate an upside failure and offset current scope for a rally to at least the psychological 6000 level.

Brazil (IBOV) has pushed above its January and April highs following a brief consolidation in the psychological 70,000 region and a close beneath 68,800 would now be required to check higher scope and suggest an upside failure.

The USA (SPX) closed above its April high today and despite the many sceptics, there is nothing bearish about the price action. The question is, can it sustain and extend this move without a reaction? So far, the rally commencing in September has only seen rising consolidations of a week or two. A close beneath 1170 would now be required to check momentum beyond a brief pause.

Platinum has been the lagging precious metal recently but today's explosive advance up out of the recent trading range and clearance of the April-May highs has opened the door to further gains, including a potential catch-up move.

Cotton is accelerating upwards at a rate that is not sustainable beyond the near term. Like many powerful trends it shows a staircase step sequence of progressively shorter duration reactions in the more recent action. The eventual peak will involve either a more significant loss of upward momentum than the last three steps, and or a bigger downside correction.

See also Eoin's comments on commodities below.

Conclusion on stock markets - The global stock market rally is resuming after a brief pause which was little more than a rising consolidation in most instances. This strength is fuelled mainly by accommodative monetary conditions, including negative real interest rates in the progressing economies. A momentum trend is evident as previously sceptical investors join the advance. Today, we saw that investors are also discounting Mr Bernanke's QE2, announced yesterday.

Significantly, the Fed Chairman mentioned the stock market twice in his op-ed for The Washington Post today. Here is a key paragraph on his QE:

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

In other words, Mr Bernanke regards higher stock prices as integral to increased confidence and therefore spending. Investors do not always have central banks on their side and it would be a pity to miss the opportunity. Inevitably, very strong gains are followed by corrections. However, the next correction of consequence, which will probably amount to no more than mean reversion towards the rising MAs, cannot occur without first breaking the sequence of higher reaction lows evident over the last two months or more. For most share indices, that would be the underside of the small late-October to early-November ranges from which prices were breaking upwards today.