The ASX 200 retreated sharply from stubborn resistance at the 2007 high of 6800, like hitting a brick wall. Breach of support at 6400, after a lower high, is now more likely and would offer a target of 5400.
Iron ore continues to test short-term support at $90. Breach is likely and would signal another decline, with a medium-term target of $80 per ton.
The ASX 300 Metals & Mining index is headed for a test of long-term support at 4100. Breach would complete a head and shoulders reversal, with a target of 3400.
The Financial sector retreated sharply from resistance at 6500. Expect a test of primary support at 6000. Breach would signal a primary decline, with a target of 5200.
We maintain exposure to Australian equities at 25% of portfolio value, with a focus on defensive and contra-cyclical stocks, because of our bearish long-term outlook.