The risk remains for a renewed sell off to occur in the Australian market

The risk remains for a renewed sell off to occur in the Australian market. The rally from last week's low, which will probably continue today, has NOT altered the negative technical view of the ASX200 index. It originally generated a technical sell signal at 5599 on 5/9/14. During last week it pulled back to within 4 points of the most recently nominated key support level located at 5240, before rebounding. There is a critical distinction between a bounce off a recent low (which is happening at the moment) and technical base forming, which is a process that occurs over a period of time, and when it does occur lays the foundation for a sustainable rally. Accordingly, a trend change has not occurred on the ASX200 index. The index technicals remain negative. These comments apply equally to stocks, such as the major banks, which have also rebounded off recent lows, but also remain technically negative, with the technical sell signals remaining in place.