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The views expressed in this report are those of Lesley Beath and may differ from Morningstar's views.

Reviewed this week

• Overview
  A decision point is looming for US equities. More...
• Fleetwood Corp (FWD)
  Resilience is impressive. More...
• Crown (CWN)
  Holding up better than anticipated. More...
• News Corporation (NWS)
  Scandal marks a significant low. More...
• Iluka (ILU)
  A bounce before another decline? More...
• Orica (ORI)
  Lengthy top formation. More...
• Rio Tinto (RIO)
  Is this time really different? More...

Please note: before making an investment decision, Morningstar recommends you read the fundamental research available on these stocks.

Disclaimer: To the extent that any content in this report constitutes advice, it is general advice that has been prepared by Lesley Beath without taking into account the particular investment objectives, financial situation and particular needs of any individual investors. If necessary, you should consult with a licensed investment adviser or dealer in securities such as a stockbroker before making an investment decision. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.

Overview

I won't go into the grisly details of last week's action. You will already know the extent of the damage.

What we will look at is what happened in those markets that were highlighted last week; these had shown some signs of improvement which, although I believed that there was still risk of the US dropping to its August 2010 lows, needed to be discussed.

We can start with the negative developments:

• The MSCI broke below the support of the August lows.
• Portugal violated its 2009 lows - but not decisively so.
• Hong Kong dropped by 9% clearly breaching its May 2010 lows.
• US T-Bonds broke above the highs of 2009.
• In Australia, the Banks and the Materials broke below their Augusts lows.

And on the positive side:

• The UK FTSE remains above the July 2010 lows.
• The weekly 'key reversal' which was registered on the German DAX and Spain's Madrid General Index (the week ending September 16) remains in place.

Unfortunately the positives make for short reading.

So what else happened?

The US S&P 500 broke below the uptrend emanating from the August lows, but did not trade below the August closing low at 1118 (this is the level that US traders are now focussed on).

The US-T-Bond/S&P 500 ratio broke above the August high and is now testing the August 2010 high.

The VIX did not push above the peak of fear that was registered in early August.

What can we glean from all of this?

It is still high risk, but the fact that the major European markets (Germany and the UK) held above short-term support is a positive.