David Fuller's view Continuous Commodity Index (CCI) (Old CRB) (weekly & daily) is a good gauge of the sector because it is unweighted and comprises 17 US-listed commodity futures which are continuously rebalanced: Cocoa, Coffee 'C', Copper, Corn, Cotton, Crude Oil (WTI), Gold, Heating Oil, Live Cattle, Live Hogs, Natural Gas (NG1), Orange Juice, Platinum, Silver, Soybeans, Sugar (No 11), and Wheat. CCI fell steeply between March 2012 and early June before finding support just above 500. It then bounced nearly 20% but did not break the overall pattern of lower rally highs since April 2011. It has been ranging gently lower over the last six months in a pattern that suggests recent supply dominance is only marginal. Nevertheless, a clear upward dynamic is required to check this drift, followed by a clear break above 600 to indicate that demand has regained the upper hand.

Japan's Nikkei 225 (weekly & daily) is quietly steady in a more gradual staircase step sequence upward trend following the explosive initial rally. Currently, a close beneath 11,000 would be required to question the consistency of this trend, which would be reaffirmed by a close above 11,500. The ease with which NKY has pushed above its 3 previous highs since 2011 suggests that a major advance is underway, although it is likely to be interrupted by a somewhat larger reaction and consolidation in the next few months. Japan's Topix 2nd Section Index (TSE2 weekly & daily) is often a lead indicator and it had a shakeout last week. It steadied today but needs to push back to its February highs to reduce near term risks. Further yen weakness (shown inversely by USD/JPY - weekly & daily) would be bullish for Japan's stock market in the current environment, but a break beneath ¥92 would most likely trigger a reaction by Japanese equities. While the weaker yen has revived interest in Japan's economy, it is not a one-way street as we can see from this chart of Brent Crude oil in yen.

Europe is no longer perceived as a nightmare but it remains a weak link in the global economy. One reason, far removed from Eurozone politics, concerns energy costs as you can see from this chart of Brent crude in euros which is uncomfortably close to the growth-sapping 2008 peak. 'Green' Germany's energy solution is to build more coal-fired power stations while there is little evidence that Euroland's shale gas and oil reserves are being developed. The Euro STOXX 50 Index (weekly & daily) needs to find support near 2600 to avoid a bigger setback during this reaction and consolidation phase. The Euro STOXX Bank Index (weekly & daily) is slightly steadier but needs to hold above 116 to avoid a deeper pullback.

Brent crude oil (weekly & daily) has paused near current levels following its best rally since August, helped by Saudi Arabia's continued production cuts. It is now ranging quietly and we have seen no downward dynamics which usually signal setbacks following overstretched rallies. WTI crude (weekly & daily) remains considerably lower and combined with natural gas (weekly & daily) this is a huge advantage for the USA in terms of energy costs.