Iron ore continues to edge downwards after a sharp fall. This is a continuation pattern and our short-term target is $80/tonne.
The Materials index found support at 12500/12700 but the outlook is increasingly bearish. We need to be alert for a possible head and shoulders reversal with a break below 12500.
The ASX 200 is edging upwards, towards another test of resistance at its 2007 high at 6800. A Trend Index trough above zero signals buying pressure but hanging man candles for the last two weeks warn of reversal. Expect stubborn resistance at 6800.
We maintain a low exposure to Australian equities, at 20% of portfolio value, because of our bearish outlook.