STOCKS
The longer term Resistances in most indices that we have been mentioning for some time, are holding well and some more meaningful profit-taking has been seen yesterday-today, with enough “worry-points” being there for the market such as Trump-impeachment, US-China talks, slow growth/ no growth prospects etc.
Within this, the Dow (26891.12, -79.59, -0.30%) dipped a bit yesterday instead of trying to move up towards 27500. Can go down towards 262500 in case of break of immediate Supports at 26800-750. Else can go up towards long-term Resistance at 27500.
Although the DAX (12288.54, +54.36, +0.44%) rose a bit yesterday, we remind that long-term Resistance at 12500 continues to hold well, and a corrective dip towards 12000 is possible in the medium term.
In Asia today, the Nikkei (21774.61, -273.63, -1.24%) seems to be finally seeing some profit-taking, which can bring it down towards 21500.
The Shanghai (2928.41, -0.68, -0.02%) has indeed come down to test 2925, in line with expectations over the last several days. Maybe there is more downside available till 2860 over the next 5-10 days, from where a meaningful rally towards 3100-25 can begin.
Mentioned Resistance at 2120 has held well on the KOSPI (2053.19, -21.33, -1.03%). The KOSPI is seeing a good dip and could well test 2020 and even 2000.
Yesterday, the Nifty (10571.20, +131, 1.15%) has closed higher and can see 11680-11700 in the near term. However, inability to break above 11700 can keep the index range bound between 11400 and 11700 for some more time. Similarly, the Sensex (38989.74) has to break above 39500 for fresh bullishness, failing which it too could be ranged between 38000-39500 for some time.
COMMODITIES
Gold and Silver remains subdued and can see some down ticks in the near term. Copper has declined below its key support in line with our expectation and remains bearish. Oil looks mixed and can consolidate in a sideways range for some time.
The resistance at 1512 on Gold (1505) mentioned yesterday is holding well. A test of 1495 and 1485 is possible while below 1412. A strong rise past 1420 is needed again to bring back the bullishness.
Silver (17.82) remains below 18 and looks slightly weaker than gold. A fall to 17.50-17.40 looks likely in the near-term on a break below 17.75.
As expected Copper (2.58) has declined below 2.59 and keeps our bearish view intact to test 2.53 on the downside.
Brent (62.40) fell to 61.45 and bounced back again. The near-term view is mixed. As mentioned yesterday, Brent can remain range bound between 61.20 and 63.50 and a breakout on either side of this range will determine the next move.
WTI (56.30) on the other hand can remain sideways between 55 and 57.
FOREX
Dollar Index has moved higher but is coming closer to a crucial resistance which is likely to hold and drag it lower. Euro is hovering above its crucial support which needs to hold to avoid further fall. The Dollar-Yen is holding above its supports and remains bullish. Pound has declined below a key support and has turned bearish now. Aussie remains subdued and keeps the bearish view intact. USDCNY has been moving higher in line with our expectation. Dollar-Rupee remains bearish and can fall further in the coming days.
Dollar Index (99.22) has an important resistance near current levels at 99.30 and then the 99.80-100 region. We expect the upside to be capped at 100 and the index can reverse lower towards 99-98.50 going forward.
Euro (1.0916) has tested its crucial support level of 1.09 as expected and is managing to hold above it for now. While above 1.09, a bounce to 1.0970 is possible on short-covering and in that case the Euro can remain stuck in between1.09 and 1.10 for some time. But a strong break below 1.09 will bearish to see 1.08 on the downside.
Dollar-Yen (107.71) remains stuck in between 107.40 and 108. While above 107.40 we remain bullish on the pair to see 108.50 and 109 on the upside. The downside could be limited to 107.15 and 107 in case of a break below 107.40.
The EUR-JPY (117.58) cross has been inching lower consistently but at a slower pace. An important support is at 117.30 which needs a close watch. A bounce from there the cross higher to 118.30. But a break below 117.30 will increase the likelihood of the cross revisiting 116 levels.
Aussie (0.6752) remains subdued and keeps our bearish view intact to test 0.6735-0.6720. The current fall even extend upto 0.6700. Immediate resistances are at 0.6765 and 0.6780.
Pound (1.2327) has declined further and is now bearish to test 1.2260 and even 1.2200. Our earlier bullish view of seeing 1.2550-1.2600 has been proven wrong.
As expected, the USDCNY (7.1344) has risen further and is heading towards 7.14-7.15 in line with our expectation.
Dollar-Rupee (70.8850) remains bearish and can test 70.75-70.72. A break below 70.72 can drag it to 70.55-70.50 and 70.34 thereafter. Upside is likely to be capped at 71.05.
INTEREST RATES
The US Treasury yields were subdued and remain bearish from broader picture. The German yields are moving down in line with our expectation and keeps the bearish view intact. The 10Yr GoI can fall further if it breaks below 6.70% which will then negate our earlier bullish view.
The US 2Yr (1.65%), 5Yr (1.58%), 10Yr (1.69%) and 30Yr (2.14%) remains subdued. We continue to remain bearish on the yields from a broader picture. As mentioned yesterday, the 10Yr is bearish to test 1.57% while the upside could be capped at 2% in case of any intermediate bounce. Similarly, the 30Yr has key resistance at 2.25% which can restrict the upside and keep it pressured on the downside to test 2%.
The German yields 2Yr (-0.76%), 5Yr (-0.77%), 10Yr (-0.59%) and 30Yr (-0.12%) have dipped further and are moving down in line with our expectation . The bearish view is intact. The 10Yr can test -0.68% while the 30Yr can fall to -0.20%.
The 10Yr GoI (6.7171%) has declined below 6.74% and can extend its fall towards 6.64% and 6.60% if it declines below 6.70%. The break and fall below 6.70% will negate our bullish view of seeing 6.85% on the upside.
