Optimism towards Asian equity markets has eased in the past week as a number of indices have retreated, leaving the likes of the Shanghai Composite and the Bangkok SET as sentiment bright spots. The proprietary ASR sentiment barometer indicator for Asia ex-Japan has fallen back, but it remains above 50 - the level since 2002 that has correlated with above average 20-day returns. The real test of underlying sentiment may be close at hand though, with the MSCI Asia ex-Japan Index just 2 per cent away from the 563.5 level, touching distance from the 200-day moving average. A break below would signal a fall back to 535 - and a notable move into negative sentiment territory. David McBain is a technical strategist with Absolute Strategy Research
