STOCKS
Stocks have resumed their uptrend and could possibly face some interim dips within an overall uptrend. Some clarity is needed in Dax which is trading at crucial levels just now.
Dow (21640.75, +0.31%) has bounced back from levels near 21470 and is trading above 21600 just now. Upward momentum looks strong and we could possibly see arise towards 21800 in the coming sessions. Near term trend is firmly up.
Dax (12452.05, +0.17%) is almost stable and is holding above the immediate support near 12400. If the support holds, the price index could further towards 12500-12600. Failure to sustain above 12400 would shift our focus to levels near 12300 or lower. Need to wait and watch.
Shanghai (3237.48, +0.20%) has risen sharply in the last 3-sessions and is heading towards immediate channel resistance near 3250-3260. From there a short correction is possible before resumption of the uptrend. Near term looks firmly bullish.
Nikkei (20092.14, +0.36%) has started to rise from levels near 19950. It could continue to move up towards 20200-20300 in the coming sessions. This could possibly pull up Dollar-Yen also to higher levels in the next few sessions.
Nifty (9899.60, +0.74%) could limit its near term dip at 9800 and could be headed towards 10000 in the coming sessions. Near term looks strongly bullish.
COMMODITIES
Gold (1238) and Silver (16.21) are still trading above their crucial support at 1231 and 16.20 respectively. A break above 1245 is necessary for gold to remain bullish towards 1260 for the near term else a fall below 1230 could take it lower towards 1220. Silver is trading within the range of 16.20-16.50 and only a close above 16.50 could negate our midterm bearish view. As dollar index is highly oversold, it will be difficult for Bullion to maintain this short term bullish momentum. At the same time market is waiting for today’s ECB press conference, at 6:00 pm IST.
Muted price action had been seen in Copper (2.71) for last couple of trading sessions. It is trading within a range of 2.66-78. Only above 2.78, higher resistances of 2.80 can come into consideration. In the medium term 2.55-57 are going to be a strong support and we will remain bullish while it is trading above those levels.
Both Brent (49.66) and WTI (47.28) moved upward as U.S weekly crude inventory data (actual -4.7M B) was highly supportive for the entire energy pack. This is the 4th consecutive week of shortage in weekly U.S crude inventory. We will remain bullish while Brent and WTI are trading above 48.80 and 46.70 on a weekly closing basis. Immediate trading range for Brent and WTI could be 48-52 and 46-50 respectively.
FOREX
All eyes are fixed on the BOJ policy meet in the morning and the ECB meet in the afternoon. Till then, no activity in the markets is expected.
Dollar-Yen (111.97) is being watched for the reaction after the BOJ policy decision due in a few minutes today. We expect the support of 111.00 to be tested before any major short covering emerges.
Then comes the ECB policy decision which may affect Euro (1.1525) which has been trading quietly for the last 2 sessions. Repeat – The trend remains firmly up but it must be noted that the net position in Euro is the largest since 2011 and any surprise from the central bank or any other corner may trigger a very sharp correction. Similarly, the Dollar Index (94.84) may have attracted too many shorts. These two crowded trades may invite nasty surprises eventually as the previous historical instances show. Therefore high caution warranted at the current levels this week.
Aussie (0.7940) has almost tested 0.80 levels with a high of 0.7990. While a couple of days of rest after the sharp rally can’t be ruled out, the larger target of 0.8150-75 remains unchanged and a break above 0.80 may provide more impetus.
Pound (1.3024) remains in a shallow corrective mode which is expected to be followed by another leg up towards 1.3125 and then 1.32-1.34 later.
Regarding Dollar-Rupee (64.29), the trend remains firmly down and but some short covering and fresh buying of Dollars can be expected near 64.20.
INTEREST RATES
The US yields have been coming off from channel resistances and could head to lower levels in the near term. The 30Yr (2.85%) could test 2.80% in the near term while the 10?Yr (2.27%) could come off towards 2.20/23%. Medium to long term looks bearish.
The German-US 2Yr (-2.00%) and the German-US 10YR (-1.73%) have dipped a bit but could rise back soon to rise towards -1.95% and -1.70% respectively. We wait for the ECB meeting today to see if that impacts the Euro and the yields.
The Japan yields could start moving higher in the coming sessions and looks bullish just now. This could possibly indicate that the Dollar-Yen may start moving up too in the coming sessions.
