TECHNICALS - MARKET REBOUND UNLIKELY TO BE SUSTAINED

The rebound that has occurred off the recent lows in the ASX200 index, major global indices, large cap stocks, oil price and base metal prices has not generated upward reversals, which is the requirement for technical buy signals to be generated / the outlook to turn positive. (Key indices recently and progressively reached previous technical sell signal target levels). A consolidation phase above the recent low points will be required if the potential for base forming is to emerge. A key part of this base forming process is the requirement for a secondary sell off after the initial rally has occurred. A bounce off a recent low, which occurred late last week, does not indicate that the markets have bottomed. Therefore, although the rebound might continue in the short-term, it is unlikely to be sustained, and the risk and expectation remains for a renewed sell off to occur. This secondary sell off on the ASX200 index has commenced this morning.