STOCKS
Most indices could be seeing only mild profit-taking in the near term and could rise some more within the current relentless rally, before they eventually take some proper rest.
The Dow (26067.28, +177.10, +0.68) has moved up after mild profit taking seen yesterday and could be heading up to near-term Resistance at 27000 while above immediate Support at 25750. A break thereof would open up the way to 28000.
Support coming up at 12400 on the DAX (12494.81, -121.99, -0.97%). Can look for a bounce from there towards 13200.
The Nikkei (22503.04, +64.39, +0.29%) dipped a bit yesterday, with near term Resistance at 23000 holding for now. A break thereof can get us up to 24000, where we can see deeper profit-taking.
Strong rise in the Shanghai (3419.44, +16.00, +0.47%) yesterday and today. Continue to watch crucial Resistance near 3450-3500. Can see a profit-taking dip while it holds. On the other hand, a straight rise past 3500 can be super-bullish. Be careful either way.
Slight profit-taking in the Nifty (10705.75, -93.90, -0.87%) and Sensex (36329.01, -0.94%) yesterday. If the profit-taking persists, we can look for a dip to 10600-400 before the rally resumes towards 11000.
COMMODITIES
Gold, Silver and Copper continue to rally while crude prices remain stable. We may expect the current rally to continue in metals as upside momentum looks strong just now.
The view on Brent (43.25) and WTI (40.83) remains the same. Watch Supports near 42 and 39 respectively. If these hold, we can see a rise to 45 (Brent) and 42 (WTI) in the coming days. From there, further rise towards 50 and 45 (respectively) could be possible.
Gold (1820.70) continues to remain bullish as very near term supports near 1800-1810 may hold well and push the prices higher. Any short corrective dip seen from 1820-1830 could be short lived as the prices may continue to head towards 1850/60 in the coming sessions. Longer term charts have room towards 1900 on the upside. Overall view remains bullish for the near to medium term.
Silver (19.16) has risen sharply breaking above 19, contrary to our expectation of seeing a dip towards 18-17 while below 19. Now 19 is a crucial support which if holds could keep prices higher in the near term. While 19 holds, Silver is bullish towards 19.5-20 in the near term.
Copper (2.8385) has risen sharply beyond our expected near term resistance at 2.81/82 which negates our view of a dip towards 2.70. On the contrary, this rise has been significant and while the upward momentum continues, it could be further bullish for Copper in the near term towards 2.85/90 before another dip comes in. The next resistance is seen at 2.90 now. View is bullish for the near term.
FOREX
Dollar index trades weak and is bearish for the near term while Euro, Pound, Aussie, EURJPY, Yuan all trade strong just now. Yuan is an outperformer amongst other currencies and could remain so for the next couple of sessions before a correction is seen. Dollar Rupee can dip below 75 today on strong Euro and Yuan.
Dollar Index (96.42) trades lower and a break below 96.40 could drag it down towards 95.99-95.70 in the near term. Current movement on the dollar index indicates that weakness could continue for some more sessions.
Euro (1.1344) has moved back to 1.13+ and while the dollar index heads towards 96 or lower, we may expect a test of 1.14 on Euro in the next few sessions. View is bullish. Yesterday’s mentioned dip towards 1.1250 or even 1.1215 could come in later on.
EURJPY (121.75) is headed towards 122 which if breaks on the upside could have further scope of rising towards 123-124 in the medium term. Overall view is bullish on EURJPY while above 121.
Dollar-Yen (107.31) has fallen along with the dip in Dollar index. While the correlation remains strong, USDJPY could trade below 108 and could head towards 107 or lower in the near term. View is bearish for the near term.
Aussie (0.6973) is unable to break above 0.70 since the last 3-4 sessions but with the sharp rise in Copper prices, Aussie should get some momentum to break 0.70 on the upside and move further up towards 0.7086-0.7100 in the near term.
Pound (1.2610) has risen in line with our bullish expectations and while the rise continues we may expect a test of 1.2715-1.2730 on the upside. Near to medium term view is bullish.
USDCNY (6.9937) has surprisingly broken below 7 at a faster than expected rate contrary to our expectation of seeing a sideways movement above 7 for some time. This is indicative of the fact that global investors are buying Chinese stocks resulting in a rally in the Chinese equity keeping the Yuan strong. Strong optimistic outlook for china is felt with Covid infections largely under control and the latest China PMI showing a sharp rebound. While the pair trades lower, we may expect a test of weekly support at 6.95 before a short bounce towards 7 can be seen.
USDINR (75.02) could open with a gap down on stronger Euro and Yuan along with a weaker Dollar. A dip to 74.85 could be possible while 75.10 may hold as immediate resistance. But we cannot negate a possible test of 75.20/25 in the coming week on a re-attempt to rise above 75 again. For today, we may expect some dip while 75.10 holds.
INTEREST RATES
The US Treasury yields along wth the German yuields look bearish for the very near term and could test supports before a fresh rally is seen. The 10Yr GoI almost fell to test immediate support but that needs to hold in order to push back the yield to higher levels and keep the upside momentum intact for the near term.
The US 2Yr (0.17%), the 5Yr (0.30), 10Yr (0.66%) and the 30Yr (1.39%) have all risen by 1bps but look overall bearish for the near term towards 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr.
The German 2Yr (-0.670%), 5Yr (-0.664%), 10Yr (-0.436%) and the 30Yr (0.009%) yields are mixed as the 2Yr and 30Yr have risen while the 5Yr and 10Yr have dippped further. We continue to look for the dip to continue towards immediate trend supports before a rise towards 0.05% on the 30Yr and -0.40% on the 10Yr is seen in the near term. On the medium to longer term, we would wait to see if the yield manages to rise past 0.05% (30Yr) and -0.40% which may trigger further upside taking the yields higher towards 0.20% (30Yr) and -0.30%/-0.25% (10Yr) respectively. The 2YR looks bullish for the near term.
The 10Yr GOI (5.7780%) has closed below 5.78% yesterday. Support is seen enar 5.75% which if holds could push the yield back towards 5.80% or higher in the near term.
