STOCKS
On Friday morning, we said, “…the Eastern hemisphere could be nearing Supports, readying for a bounce.” It looks like the Western hemisphere also got a whiff of the potential bullishness and rallied on Friday. We now need to see how sustainable the rally is likely to be. For now, the markets look bullish for the next few days at least.
Instead of falling towards 22000, the Dow Jones(23433.16, +746.94, +3.29%) saw a big rally. It brings back the possibility of a rise towards the immediate resistance at 24000, with 22600 being the immediate Support now.
The mentioned Support at 10300 held strong on the DAX (10767.69, +351.03, +3.37%), triggering a good rally, which increases the chances of testing the resistance at 10900.
As hoped for, the Nikkei(20113, +2.82%) found Support near 19400 on Friday and has posted a strong gain today. Look for a rally towards 20500 in medium-term.
Shanghai(2532, +0.71%) also saw a strong bounce from the long-term support at 2450 on Friday and may test Resistance at 2550-75 this week.
The Sensex (35695.10, +181.39) and Nifty (10727.40, +55.10) both respected the Supports at 35250 and 10600 respectively mentioned on Friday and can rise towards 36500 & 10900 respectively in the near term.
COMMODITIES
Brent (57.72) and Nymex WTI (48.61) are trading higher and look bullish for the near term. 58 and 50 respectively could act as decent resistance from where a slight dip is possible before a rise towards 60 and 54 is seen.
Brent-WTI spread (9.08) is rising towards resistance at 9.45 and could come off in the near term back towards 7.75-7.50 in the near term.
Gold (1290.60) came off after testing 1300 last week. As mentioned in our earlier editions, 1300-1320 is the immediate resistance zone that is likely to hold and push prices back to 1270. Only on a break above 1320, we would consider higher resistance at 1350.
Silver (15.83) is heading towards immediate horizontal resistance near 16.0-16.1 and while that holds, a sharp decline towards 15.25 may occur. But with some chances of weakness in the US Dollar, precious metals could see some gain in the near term.
Copper (2.6380) has risen a bit but while below 2.68, there is scope of falling towards 2.55 again in the near term. Weekly line chart shows support at 2.55 to be strong enough to hold in the longer run. Some more sessions of sideways range trade above 2.55 is possible for this week and the next.
FOREX
Dollar Index (96.01) is trading near 96 and is looking bearish for now. The index could fall in the near term towards 95.50. Thereafter a break below 95.50 would take it lower towards 94.80 else a bounce may push it higher towards 98 again.
Euro (1.1421) has bounced back to trade above 1.14 as Dollar sees fresh weakness. While the dollar Index looks bearish for the near term, Euro could re-test 1.15. Repeated testing of 1.15 could give way for further upmove in the medium to longer term, hence we watch price action closely near 1.15.
Dollar Yen (108.25) has trend support at 108 on the 3-day line charts and while that holds, a bounce from 108 back towards 110 looks possible. Failure to sustain above 108 could make the pair vulnerable to a fall towards 105 in the medium term. Watch price action near immediate support at 108.
124-123 levels seem to be an immediate support for Euro-Yen (123.63) on the 3-day line charts. A bounce from there could take it higher towards 128; else a fall in the medium term towards 120 will have to be considered. Preference is for a bounce from 123-124 levels.
Pound (1.2743) has come up to test immediate resistance near 1.2750 which if holds, could push the currency towards 1.24 again in the near term. Trade within 1.28-1.24 is preferred for the near to medium term. A break above 1.28 if seen and sustains could indicate a reversal in the current downtrend, forcing us to re-visit our target levels on the upside.
Aussie (0.7126) has 21-day MA as immediate resistance near 0.7150. If Aussie manages to break on the upside, it could rise towards 0.73 in the near term.
USD-CNY (6.8446) is trading lower and looks bearish just now. A fall towards 6.8310 just now and 6.79 later is a possibility. Near term looks bearish.
Dollar Rupee (69.73) is trading at 69.52 on the NDF. This could indicate some strength in Rupee today’s session towards 69.40.
INTEREST RATES
Fed Chairman Powell made dovis statements on Friday, saying that the Fed was listening to the markets carefully. The market is now reported to be even pricing in a rate cut in 2019, instead of one hike which was the accepted likelihood a few weeks ago.
While the market expectations will see flip-flops over time, it might be prudent on our part to budget for one hike after June.
For now, the US 2Yr (2.50%) can fall some more over the coming weeks, to test Support near 2.10%. The US 5Yr (2.50%), which had dipped below 2.40% briefly last week again trades above important Support at 2.45%. It is to be seen whether the 5-2 Spread (0.0%) manages to rise towards +0.04%, or whether it falls back towards -0.05%.
The German-US 2Yr Spread (-3.09%) continues to creep up towards Resistance near -3.00%. Maybe it will come down from there.
The 10Yr GOI (7.448%) may have Resistance in the 7.45-50% region and is expected to come down towards 7.10% while that holds.
