Rising interest rates. Trade wars. Credit bubbles. Housing market fears. Bank misbehaviour. Low wages growth. Low inflation. The list of market worries is extensive. Investors have a lot to fear. Among all this doom and gloom there’s a headline many investors may have missed:

Australian Share Market Hits New Ten Year High

In trading on Wednesday the Australia 200 index broke above the previous, post-GFC high tide mark. In the big picture view of the Australian market, this a highly significant event. The rise came despite weakness in oil and metals prices and a plunging Telstra share price, making it all the more remarkable.

The break to new highs occurred on turnover that was 20% + over average. This is what analysts call “volume confirmation”. From a technical point of view, while the index stays above the break-out point of 6,150, it is now more likely rise than fall. This long term chart shows why this market move is so important.

This is a monthly chart, meaning each of the blue and crimson ‘candles’ represents one month of movement for the index. The mountain on the left of the chart is the great bull run from 2003 to 2007, and the post-GFC fall. The horizontal lines are the previous ten year highs at 6,000, and the recent high at 6,150. The upward sloping line on the right is the up trend that began in early 2016.

The move above 6,150 highlights potential for the market to reach the previous all-time high at 6,852

Very few market watchers had the foresight or the courage to make this call (*ahem* Peter Switzer is one of them). This price action will very likely see many of the more bearish commentators lift their year-end targets for the Australian share market.

Yet for many investors, it doesn’t feel like a bull market. The media focus on negatives for the Australian economy and market could see many investors doubting the strength of the move, despite the unambiguously positive indication from the index.

Ironically this dynamic has potential to sustain the up moves. The emotional phases of a bull market are despair, scepticism, optimism and euphoria. Any scepticism around this market break out fuels later gains if the market rises. The doubters are forced to jump in late if the market continues to gain.

It’s not just investors who doubt the move. CMC markets has two separate platforms – our online Stockbroking pro platform, and the Next Generation trading platform. The trading platform offers a client sentiment indicator that reflects up the minute views of total client position in a market. Here’s the current sentiment for the Australia 200 index:

Two thirds of all traders with a position in the index are short. By value the negative sentiment is even more overwhelming, at 93%. Not only will fear of missing out force investors into the market, gains could be fuelled as traders scramble to buy back their losing short positions.