STOCKS
Our bullishness over the last few days (for the G3) has worked out well enough so far, but now some more push on the upside is needed. China and India could be vulnerable.
As expected, the Dow (24748.73, +108.49, +0.44%) has moved up to 24750, recovering from an intra-day dip to 24419.16. It needs to show some more muscle today to rise up to 25000 over today-tomorrow, else there will a bit of a danger of a dip back to 24500 which will not be bullish at all.
Contrary to expectation, the DAX (11309.11, -45.61, -0.40%) dipped yesterday instead of rising towards 11600. However, Supports at 11200 and 1100 are still available.
Good rally in the Nikkei (22085) yesterday, which is continuing today, in line with expectation. This is potentially bullish for the longer term as well, but we need a rise past 22500 as confirmation.
The Shanghai (2571.7) is treading water or we may even say drifting lower, waiting for the Trump-Xi meeting over Friday-Saturday. Maybe we have to be ready to see a decline towards 2500 or lower.
The Nifty (10685.60, +57.00, +0.54%) rose a little more yesterday, approaching the crucial Resistance at 10725. As mentioned yesterday, failure to break above 10725-10800 can push the Nifty down to 10500-300 in the medium term. Maybe we have to be ready for that. The corresponding Resistance on the Sensex (35513.14, +0.45%) comes in at current level and could push the market down towards 34500.
COMMODITIES
Precious metals look bearish for the near term while the Crude prices could see a slight rise with immediate trend being sideways.
Brent (60.50) and WTI (51.84) have risen slightly. As mentioned yesterday, Brent could attempt a rise to 62 which is the immediate resistance while WTI may test 53. From there a decent fall is expected back towards 58 and 50 respectively.
Brent –WTI spread (8.58) could bounce a little towards 9 before again declining towards 7 in the medium term.
Gold (1214.20) has come off from immediate daily resistance at 1230 and while that holds, a re-test of 1210-1200 looks possible in the near term. Unless the price manages to break above 1230, range trade within 1200-1230 region may continue in the near term.
Silver (14.11) has also dipped and could test support near 13.80 on the downside. Near term looks bearish for the next 1-2 sessions.
Copper (2.7230) is also trading weak and could test 2.65 before bouncing back towards 2.80/85.
FOREX
Dollar Index has crucial resistance coming up near 97.69 – if this breaks, it would be a bullish indicator. Watch supports at 1.12, 1.274 and 0.719 on Euro, Pound and Aussie. USDINR could stay below the 71.30/10 resistance.
Euro (1.1292) : While below immediate resistance at 1.130-1.131, preference is for Euro to dip in the next couple of sessions, targeting 1.125 on the downside. A test of crucial support at 1.12 could follow in the next week. Alternatively, a break above 1.13 in today’s session might lead to an interim rise to 1.135, from where it might then again come off.
Dollar Index (97.39) could rise more towards its previous high of 97.69, where we can see resistances on 3 day and weekly candles. Whether this resistance holds or breaks could be crucial for the Dollar Index – a break past this resistance could be a sign of bullishness towards 99-100 in the next 1-2 months.
Dollar-Yen (113.79) could test resistance on daily candles near 114.0-114.1 in the next 1-2 sessions. Next 1-2 weeks could see some ranging between 114 on the upside and 112.5 on the downside.
Pound (1.2742) is testing crucial support on weekly candles near current levels, a break below which could be very bearish. On weekly line chart, it has already broken below the 1.28 support making it look very bearish in the next few weeks. Only a rise above 1.2800-1.2825 in the next couple of sessions could negate the downside below 1.274 – otherwise, preference is for bearishness.
Aussie (0.7236) has important support provided by the 8 weeks MA at 0.7193 and immediate resistance on daily candles at 0.725. A break below 0.719 could again open up possibility of a test of 0.71 in the near term.
Euro-Yen (128.50) – Immediate resistance near 128.75 could continue to hold for Euro Yen. If Euro falls towards 1.12 and Dollar Yen stays below 114, Euro Yen could fall towards support near 127.5 in the next week.
Dollar Rupee (70.7675): Dollar Rupee is likely to remain below 71.30/10 resistance and could test 70.40/20 in the near term.
INTEREST RATES
There were seemingly different voices from the Fed yesterday, with the market interpreting Richard Clarida’s remarks as “staying on course” with rate hikes, while Bullard might have been more dovish.
Whatever that be, the US Bond yields have not dipped as yet, with the 2Yr (2.83%) and 10Yr (3.06%) remaining where they were on Monday. Perhaps the market wants to see the US GDP data today and hear what Jerome Powell talks at the Economic Club of New York today. Then tomorrow is the release of Minutes of the November FOMC meeting. From the shape of the 2Yr chart, though, it looks like there is a two-way possibility.
Depending on whether Powell will like to be remembered as the man who pushed USA into recession (or not), the 2Yr (2.83%) can either rise sharply towards 2.87-2.90% or break below rising trendline to test 2.80% and then fall lower. The US 5Yr (2.89%) seems to have room to fall to 2.82%, so to that extent, the 2Yr might tilt towards the downside.
Or, could it be that Powell might want to be remembered as the only man who stood up to Trump? Let us see. Today and tomorrow should be interesting.
In India, the 10Yr GOI (7.7338%) has been creeping up a little over the last two days, but now faces immediate Resistance at 7.75% and then stronger Resistances at 7.80% and 7.90%. Our preference is for a dip towards 7.70-7.65-7.60%.
