STOCKS
Dow still struggles to gather momentum to breach the 28000-28200 resistance region. Inability to rise past 28200 and a fall below 27500 from here could be bearish. DAX has come-down and will need to sustain above 12800 in order to keep our bullish view intact. Nikkei has dipped but is likely to get support in the 23000-22700 region and bounce-back again to keep the near-term bullish view intact. Shanghai has risen above 3400 and is likely to test the crucial 3450-3470 resistance region now. Price action in the coming days will need a close watch. Sensex and Nifty have declined on Friday. Inability to see an immediate bounce-back over today/tomorrow can drag the Sensex and Nifty lower in the near-term which in turn will delay our preferred rise.
The Dow (27931.02, +34.30, +0.12%) continues to struggle below 28000-28200 resistance zone indicating lack of fresh follow-through buying. We reiterate that a failure to rise past 28200 and a subsequent break below 27500 from here will be bearish to see a corrective fall to 27000-26500. A strong rise past 28200 will be needed to become more bullish to see further rise.
DAX (12901.34, −92.37, +0.71%) has come-off sharply to close below 13000 on Friday. The index has to sustain above 12800 in order to keep our bullish view intact of breaking above 13200 and rise to 13600-13800. A fall below 12800 will negate our bullish view and will drag the DAX lower to 12400-12200 in the coming days.
Nikkei (23145.28, −144.08, -0.62%) has come-off slightly today but is likely to get support in the 23000-22700 region now. While this support holds, the near-term bullish view is intact to see 23800-24000 on the upside. As had mentioned last week, 24000 is a crucial resistance from where we expect a sharp corrective fall towards 22000-21500 in the coming weeks.
Shanghai (3427.37, +67.27, -2%) has risen sharply above 3400 and is showing signs of strength. The chances of seeing 3250-3200 on the downside that we had been expecting stands negated now. 3450-3470 will be an important resistance that will need a close watch now. A strong rise past 3470 will pave way for 3600-3700. We will have to wait and watch.
Contrary to our expectation, Nifty (11178.40, -122.05, -1.08%) has declined below 11200. Inability to see an immediate bounce-back above 11200 will delay our preferred break above 11400 and the rise to 11600. While below 11200, a corrective dip to 11000-10900 can be seen in the near-term and then a fresh leg of rally can begin and keep the broader uptrend intact.
Sensex (37877.34, −433.15, -1.13%) on the other hand has dipped below 38000. While below 38000, it can move down to test 37000 on the downside and then can move up again. Our preferred rise to 39000-39500 will be delayed but the chances will still remain intact as long as the Sensex remains above 37000.
COMMODITIES
Crude prices are likely to move up slowly in the near term but need to face interim resistances and break on the upside to gather further upside momentum. Gold and silver may range in a broad range for sometime before deciding on further direction from here. Copper is likely to move up in the near term within the broad sideways range of 2.80-3.00.
Brent (45.13) and WTI (42.39) look bullish for the near term and could continue to move up slowly. A rise above 45.50 and 42.50 respectively is needed to trigger upside momentum for the coming sessions.
Gold (1949.90) is likely to trade within 2000-1885 region for the near term, both being immediate resistance and support levels. Only a break on either side thereafter may signal further direction for the longer run. For the very near term, Gold looks stable.
Silver (26.34) is likely to trade below 28 while downside is likely to be limited to 24 on the downside.
Copper (2.8645) has bounced as support near 2.80 holds well. A rise towards 2.90-2.95 is on the cards for the near to medium term.
FOREX
Dollar Index looks weak while below 94 and a break below 92 could trigger a faster fall towards 90 in the near term. Euro, EURJPY, Aussie and Pound could gain if the expected fall in the Dollar index is seen. USDCNY looks bearish while below 6.96. USDINR could face resistance at 75.0-75.05 and dip towards 74.80/70 in the near term.
Dollar Index (92.99) has been holding well below 94 and looks strongly under the influence of the bears. A break below 92 could trigger a sharper fall towards 91-90 in the near term.
Euro (1.1856) has been showing signs of rising back towards 1.19+ in the near term. There is no sign of weakness just now. Watch price action near 1.19-1.1920 in the near term to see if a fall is seen or if the pair manages to move higher. While Dollar Index trades lower, Euro looks bullish.
EURJPY (126.35) is stable just now but while below 127 we may expect some weakness in the near term. A sharp rise in Euro above 1.19 would however lead to a rise in EURJPY as well in the near term.
Dollar-Yen (106.53) could be limited to 106 on the downside for the near term from where a bounce back is expected towards 107 or higher in the near term. Directional correlation with the Dollar index remains intact and a sharp bounce in the index above 94 is needed for Dollar-Yen to get some positive boost for a sustained rise above 107. Watch support near 106 to hold for the near term. A break below 106 could indicate a fall towards 105-104 again in the coming sessions.
Aussie (0.7187) has been rising from support near 0.7132 and while that holds, we may expect a test of 0.72-0.74 on the upside soon.
Pound (1.3099) has immediate support at 1.30 which if holds could produce a bounce back towards 132 in the near term. Sideways consolidation is likely to be seen in the next few sessions.
USDCNY (6.9407) has immediate trend resistance near 6.96 and while that holds, the pair looks bearish towards 6.92-6.90.
USDINR (74.9050) closed higher on Friday. The pair has scope of rising towards 75 on the upside while downside could be limited to 74.70.
INTEREST RATES
The US Treasury yields remain higher and keep our bullish view intact of seeing a further rise. The German yields have crucial resistances ahead which we expect to hold and produce a bounce. A break above the resistances will negate our bearish view and turn the outlook bullish. The 10Yr GoI had surged on Friday following the strong inflation data release and has negated our view of seeing a dip. The outlook has turned bullish now and the yield can move up further in the coming days.
The US 2Yr (0.15%), 5Yr (0.29%), 10Yr (0.70%) and the 30Yr (1.44%) Treasury yields had surged sharply last week especially at the far-end and has turned the outlook bullish. We retain the bullish view of seeing a further rise to 0.80% (10Yr) and 1.5% (30Yr) in the near-term. As mentioned on Friday, while the current momentum sustains, the yields may have the potential to extend the upside even up to 0.90% on the 10Yr and 1.65%-1.70% on the 30Yr in the coming weeks.
The German 2Yr (-0.66%), 5Yr (-0.64%), 10Yr (-0.42%) and the 30Yr (0.01%) yields have closed just below their key resistances last week. As mentioned on Friday, -0.35% on the 10Yr and 0.05% on the 30Yr are important resistances which we expect to hold and produce a reversal again to keep the broader downtrend intact. A strong rise past -0.35% (10Y) and 0.05% (30Yr) will negate the bearish view and will open doors for a further rise to -0.20% (10Yr) and 0.20% (30Yr) in the coming weeks. We will have to wait and watch.
The 10Yr GoI (5.9569%) had surged breaking above 5.95% on Friday following the strong inflation data release thereby negating our bearish view of seeing 5.85% on the downside. The outlook has turned bullish now and the 10Yr GoI can test 6% in the near-term. While above 5.95%, the yield now has potential to target 6.10% on the upside in the coming weeks eventually.
