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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

A mixture.

• Overview
  Continued volatility expected. More...
• Wotif.com (WTF)
  An impressive chart pattern. More...
• CarSales.com (CRZ)
  A topside break. More...
• BHP Billiton (BHP)
  Still a concern. More...
• Westpac Bank (WBC)
  To outperform. More...
• QBE Insurance (QBE)
  Upgraded this week. More...
• Brambles (BXB)
  Still at risk. 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

The Australian market bounced strongly last week, after a retest of the 200DMA the week prior. This successful test of support was also evident in the UK, Germany, France, Italy, Sweden, Spain and Greece. The situation was similar in some of the smaller Asian markets.

And the MSCI World index has held the uptrend from the July lows.

These support levels were discussed in last week's report and the potential for a near-term bounce highlighted. I also discussed the position of the US market and the US dollar, as they had the capacity to derail a recovery in global equity markets. The reasoning behind this view was that the US equity market was still at elevated levels and had not yet undergone a significant correction. And the US dollar was sitting on critical support - failure to hold that support would have opened potential for acceleration to the downside, which would have put further upward pressure on commodity prices, oil included.

So has anything changed over the course of the week?

Well, action across Asia and Europe was impressive, but there is potential for a period of sideways action in the latter. Asian markets appear more robust.

The US dollar also managed to bounce from support and this has, so far, alleviated near-term risk.

Unfortunately the US equity market remains at risk of a pullback, and it would be unusual for a pullback in this market to be ignored by Europe and Asia.

As noted last week, one possible scenario would be that the US market could track sideways over the next few months, taking it slowly back to the 200DMA, as other global markets bounced from an oversold condition. That would be an ideal situation.

Is that a possibility?

Well the US did underperform marginally last week, with a 2.7% rise in the S&P500, as India and Chile advanced by 5% and European markets rose by 3-4%. Smaller Asian markets also performed well.

This could be the start of a new trend.