Risk remains for a renewed sell off in major US and European markets and is a key technical risk overhanging the Australian market outlook

Risk remains for a renewed sell off in major US and European markets and is a key technical risk overhanging the Australian market outlook. A negative global market index trend remains in force, despite the current rally. Recently the Dow Jones, S&P500, Nasdaq, CAC , DAX, FTSE and Nikkei generated technical sell signals. Although over half these indices have reached the nominated minimum downside targets, the technicals remain negative. There is a critical distinction between a rebound 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 in the key US and European indices. By contrast in the Asian markets : the Hang Seng index recently generated a buy signal, and the Shanghai Composite index remains technically positive given there is no sign of a technical top formation emerging