Technicals - ASX200 index next major downward move underway

The ASX200 index previously generated a technical sell signal at 4909 on 15/12/15. Friday's close below the 4909 support level has generated a further technical sell signal which re-enforces the expectation for a pullback to 4633. It is difficult to see how the Australian market can stage a sustained rally in the near-term from a technical viewpoint due to 1) the global market trend is negative, with the potential existing for further technical sell signals to be generated by the S&P500 index ( refer to link to last week’s Wire (VIEW LINK) and also by the Shanghai Composite index; 2) the commodity price technicals remain negative (with no sign of base forming); and 3) a reduced number of large cap stocks remain rated as technical buys.