It seems as if the spring rally has probably exhausted itself. And it's about time, given the extent and rapidity of the move. The MSCI World Index increased by 45.2% from its March lows until the early June high, and the MSCI Emerging Markets Index by a staggering 68.9%. Both these indices have only had one down week since the advance commenced in early March.

Leading markets such as Russia (+137.0%), India (+89.5%), China (+54.7%), and Brazil (+50.4%) significantly outperformed laggards such as the Dow Jones Industrial Index (+27.5%) and the S&P 500 Index (+39.9%), although all markets recorded very respectable returns. The major US indices have gained for 12 out of the past 14 weeks.



Focusing on the US, the S&P 500 Index (911) has backed off resistance at its January high (935) and is less than 5 points away from breaking down through the key 200-day moving average (906) -- broken to the upside only 2 weeks ago.

Importantly, short-term oscillators such as the rate-of-change (momentum) indicator is on a knife’s edge of giving a selling signal -- i.e. crossing through the zero line in the bottom section of the chart below. Also note the negative divergence between the Index and the ROC line -- typically this would be a warning sign that a near-term trend change will take place.