Market action is pointing to a potential shift in sentiment. Copper and oil prices are firming, the VIX (volatility index on the US SPX 500) has tumbled and shares continue to rally. This might mean that the lows hit between Christmas and New Year are a turning point for share markets, and a new bull run is beginning. The chart shows that the technical picture has improved dramatically.

The rally broke the downtrend and lifted the Australia 200 index over the short term support/resistance at 5,590, and the long term level at 5,640. These levels take on added significance. A fall below these points could mean further damage. However while the market holds above these levels, in my view the risks are on the upside, with potential for a move towards the zone between 5,640 and 6,000. Any break through 6,000 would bring into view the ten year high around 6,375.