STOCKS
Dow (21813.67, +0.14%) made an intra-day high of 21906 on Friday before closing near 21813. Immediate resistance is seen near 21900-21950 levels which could possibly push the index to much lower levels in the coming sessions. Downside is open towards 21700 and near term looks bearish for the Dow.
Dax (12167.94, -0.11%) will have to show us a confirmed break below 12000-11940 levels to break the current sideways movement and indicate any fresh falls for the coming sessions. Else the index could remain range-bound within the 11940-12350 region in the near term.
Nikkei (19430.14, -0.12%) is almost stable trading in the narrow region below 19580. As mentioned last week, the index looks bearish and could head towards 19000 in the medium to long term. For now the index could trade in the 19200-19500 region.
Shanghai (3364.51, +0.99%) broke above the immediate resistance at 3300 on Friday and has managed to continue the upward momentum today also making an intra-day high at the second resistance near 3375. If the index manages to sustain a break above 3375 in the next few sessions, it could be a clear indication of extension of the uptrend towards 3400-3500 levels in the longer run. There is some slight possibility of seeing a correction from 3375 before it shoots up higher. For now, the bullish momentum looks strong.
Nifty (9857.05, +0.05%) is likely to re-test 9700-9750 levels while below 9950. Near term likely to remain bearish unless we see a sustained break above 9950 levels.
COMMODITIES
Gold (1294.38) has been stable just below crucial resistance near 1300 and has been range bound in the 1280-1295 region for almost 5-6 sessions now. This is unlike the movements seen in Apr’17 or in Jun’17 where the price came off sharply after testing levels near 1300 within a single session. Could this mean that the current stability in the price is an indication of a base building before a sharp rise ahead? Could the bulls be getting stronger to shoot up above 1300 in the near term? Possibly so. We need to be cautious near 1300 and watch price action closely.
Silver (17.11) is almost trading in a sideways range and could test resistance near 17.25-17.40 in the coming sessions.
Copper (3.0505) has moved above the interim resistance near 3.00/02 and is trading higher just now boosted by a stronger Shanghai upshot and while the Chinese stock index continues to rise in the near term, Copper could also be headed towards 3.15/17 in the coming sessions before seeing a pause.
Brent (52.60) and WTI (47.67) are both looking stable. While Brent may come off towards 50 while below 53.80, WTI could trade within 50.00-46.50 levels for some more time. Some sideways movement is expected just now while the prices are above 47 and 46 respectively.
FOREX
Strong rise was seen in the Euro (1.1925) after Jackson Hole speeches on Friday, reasserting the overall uptrend, establishing 1.18-17 as good Supports and setting targets between 1.20-21.
The rise in Euro-Yen (130.17) due to the rise in the Euro-Dollar is encouraging for "Risk-ON" trades, but we need a rise past the July high of 131.40 to bring in more confidence.
Need to watch Dollar-Yen because although Dollar-Yen (109.16) remains ranged between 108.60-109.80, the slow decline in the US-Japan Yield Spreads could lead to eventual Yen strength. Need to watch this. See Interest section below as well.
The Dollar Index (92.52) is trading just below its 200-week MA at 92.59 and can test 91.80 soon enough.
The Pound (1.2888) also rose sharply on Friday, piggybacking on the Euro, but is dipping from Resistance at 1.2915. The outlook still looks weak while below 1.2915.
The Aussie (0.7940) has managed to bounce from levels just above 0.7850 over the last three days, keeping its overall uptrend intact. Can look for a test of 0.80+ while above 0.7900.
Dollar-Rupee trades near 63.95 on the NDF, reflecting global Dollar weakness.
INTEREST RATES
Post Jackson Hole, the German-US 2 Yr Spread (-2.08%) has dropped but the German-US 10Yr Spread (-1.79%) has moved up a wee bit from -1.80%. The Euro seems to be responding more to the German-US 10Yr Spread and has moved up.
Yellen talked about what was needed to be done, and was done, after the 2008 financial crisis and warned against excessive optimism now. Some people take this as hints of a possible rate hike in December. Draghi talked about increasing chances of growth recovery.
US Yields (5Yr 1.76%, 10Yr 2.17%, 30Yr 2.75%) are largely steady. The US 5Yr has good Support at 1.7%, while the 10Yr has good Support at 2.095%.
Supports seen near current levels on the Japanese 5Yr JGB (-0.131%) and the 30Yr JGB (+0.83%), suggesting a possible bounce. Plus the Japanese Yield Curve continues to steepen at the far end, since 22nd June. This might lead to Yen strength, if it continues.
UK Gilt Yields are also testing Supports near current levels (5Yr 0.46%, 10Yr 1.05%) and could be candidates for bounces.
