STOCKS
Some recovery is visible in the stock indices which had all declined sharply on Friday. While immediate supports hold, at least some ranged trade is possible if not an immediate upmove from current levels.
Dow (25444.34, +0.26%) was not able to rise sharply beyond 25750 last week and instead fell back from there to re-test 25250. Ranged trade between 25750-25000 is possible in the near term. 25000 is a crucial support which may hold and push back the price towards 25750 and maybe higher in the medium term.
Dax (11553.83, -0.31%) is trading stable just now. Note important support in the 11300-11400 region which could produce some bounce in the near term. While 1300 holds, Dax could again attempt to move up towards 11700-11900 in the medium term.
Nikkei (22461.77, -0.31%) has been attempting lows below 24000 in the last couple of weeks and another attempt to break below 22400 would make the index vulnerable to a further fall in the medium term. On the weekly chart, 22400-22200 is the zone above which the long term uptrend in Nikkei would continue to exist. A break below 22200, if seen, would initiate fresh weakness in Nikkei.
Support near 2450 on Shanghai (2636.88, +3.39%) mentioned last week has held well as the index has bounced back sharply to trade higher. While the index trades above 2600, a move towards resistance near 2750-2800 could be seen while the upside momentum remains intact.
Nifty (10303.55, -1.43%) could trade in the 10100-10700 region for some time while immediate resistance near 10700-10800 holds. A break above 10800 is need for the index to again start moving up. Some range-trade looks possible in the near term.
COMMODITIES
WTI (69.44) is trading above support at 67-68 levels and while that holds, Crude could bounce back in the near term towards 71-72 again. Brent (79.87) also has support near 78 and lower at 75 which could produce a near term bounce in the crude prices.
Brent-WTI (10.53) spread is trading at resistance level on the 3-day chart and if that holds, could come off towards 9 in the medium term. This could be bearish for the Crude prices in the near term.
Gold (1231) continues to trade in the narrow 1220-1235 region. As mentioned earlier, 1240 is an immediate resistance and that needs to break on the upside for the rally to continue in Gold. Gold/WTI ratio (17.75) has dipped a bit from 18. While there is scope of testing 19 at least in the near term, this could be bullish for Gold as well.
Copper (2.7925) has bounced well from levels near 2.738 seen on Friday. This can be attributed to the bounce in Shanghai. While above 2.70, range trade in the 2.70-2.85 region is likely to continue. In the longer term Copper looks bullish.
FOREX
Euro-Dollar and Pound-Dollar could rise towards 1.1568 and 1.32 respectively in this week. Watch crucial resistance near 0.715-0.720 on Aussie. Chances of bullishness in USDINR while above 73.25.
Euro (1.1508) bounced from support on daily line chart near 1.143 on Friday and could now rise towards the 21 days MA at 1.1568 in the next couple of sessions, which has provided resistance in the past and could again do so. Only on a break above the 21 days MA can we look at higher levels of 1.165-1.170.
Dollar Index (95.70) could dip towards support near 95.3 on daily candles in this week, while it stays below 96.
Dollar Yen (112.57) – While above the support at 112, it could rise towards the 21 days MA near 112.95 in this week where it could find some resistance. If it breaks above that, there is higher (and stronger) resistance near 114 (as seen on 3 day line chart).
Euro-Yen (129.56) couldn’t close below the 21 weeks MA (129.45) last week, which we have been saying, is necessary for bearishness towards 127. A rise to 112.95 and 1.1568 on Dollar-Yen and Euro-Dollar this week suggests that Euro Yen could rise towards the 21 days MA at 130.67.
Pound (1.3062) has risen from crucial support at 1.30 and could again rise towards resistance near 1.32 on daily candles in this week. The 89 weeks MA (1.3208) might also provide some resistance at that level.
Aussie (0.7110) – On weekly line chart, Aussie seems to have bounced from long term support near 0.7053. However, it has crucial resistances in the 0.715-0.720 region and then higher up at 0.7299 (21 weeks MA). There could be a rise towards 0.715 in the next couple of sessions.
Dollar Rupee (73.325): Advisable to stay guarded for a possible rise in this week while it stays above 73.25. A break below 73.25 opens up 73 and lower.
INTEREST RATES
India 10 year yield (7.92%) has risen slightly above resistance (earlier support ) near 7.90%. While above this level, there could be some chances of another rise towards 8% in the near term. A break back below 7.90% would however open up support near 7.80%-7.75%.
The US 10 Year (3.19%) : Support to watch out for is now slightly higher near 3.17%. While above that, there are chances of a rise towards the previous high of 3.25%-3.26%. A break below 3.17% could take it towards 3.10%. Given below are some of the recent US data releases which have been important for US yields:
US Industrial production increased 0.3% in Sep, in line with expectations (this is the 4th straight month of increase). However, the 3rd quarter growth in Industrial production of 3.3% (annualized) is much lesser than the 5.3% growth in the 2nd quarter.
Moreover, Capacity Utilization stayed unchanged at 78.1% slightly below the expected 78.2%.
US Retail Sales data showed that the growth in Sep (0.1%) was much lower than the expected 0.6%.
These 3 data points could have had some bearish impact on yields but three other factors seem to be keeping yields elevated –
increased supply of US treasury bonds
US jobs report showing job openings at a record high, indicating further tightening in the job market
The FOMC minutes turning out to be hawkish
10 Year German-US spread (-2.73%) looks bearish towards long term support near -2.80%. A break below -2.80% (if it happens) would be very bearish.
German 10 year yield (0.46%) – While below 0.55%-0.60%, it could fall towards support near 0.35%-0.30% in the near term. A break of 0.30% (if it happens) would be very bearish.
