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One day up, the next day down: True to theme today, SPI futures are indicating a 73-point jump for the ASX 200 at the open, following the recovery witnessed in US shares overnight, and the better than expected activity in European shares. There's the impression in markets currently that this variety of volatility may stay the norm for a while: days of radical losses, followed by rapid recoveries. The primary worry for index traders; however, is that as it stands, the up days aren't as strong as the down days. That is: these markets are making lower lows and lower highs.
From correction to bear market? It's for this reason that market participants stood up and noticed yesterday's violent activity -- the question being, is this a sign of a bearish trend to come? The ASX entered into technical correction mode, defined as a 10% drop from highs, brought about by a broad evacuation out of equity markets. 2018's gains have hence been wiped clean, taking the index close to a very sticky point of support/resistance at 5620, last seen in October 2017 when the market was in a rather clear accumulation phase. An entry into this realm for the Australian market would be as good as any indicator that its recent medium-term run higher is over – and is poised for a much-needed shake out.