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.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.