STOCKS
Dow (24726.65, -0.11%) has decent resistance near 24900 and while that holds, the index could spend time within 24900-24700 region in a narrow sideways range. A possible dip to 24600 or lower looks likely before another up-leg in the medium term.
Dax (13069.17, -1.11%) saw a sharp fall from levels just above 13300, coming back to test 13000. Note that 13000 is an immediate support which if holds, could push the index back towards 13400 in the next few sessions. Else, failure to remain above 13000 could turn bearish taking the index to as low as 12800 again.
Nikkei (22792.94, -0.43%) continues to trade below 23000. Looking at the strongly bullish US-Japan 10YR yield spread (2.42%), Nikkei and Dollar Yen are likely to continue to move up in the near term. Nikkei if does not move up, would possibly prefer to remain stable below 23000. (Refer to Interest Rates & Forex sections below)
Shanghai (3281.36, -0.20%) has again faced some rejection from 3300 and is headed towards 3250 soon. As mentioned earlier, the 3320-3250 region is likely to hold for now. A break below 3250 could take it lower towards 3240 in the medium term. Near term does not look very positive.
Nifty (10444.20, -0.18%) and Sensex (33777.38, -0.18%) are likely to remain below 10500 and 34000 for some time either coming off towards 10300 and 33500 respectively or spending some time in a sideways consolidation.
COMMODITIES
Gold (1267.64) could be headed towards 1280 slowly and could come off from there back towards current levels. Trading within the downward channel currently, the price is likely to remain within 1280-1260 for some more time.
Silver (16.207) has been coming up from levels near 15.60. and could be headed towards 16.40-16.60 levels in the near term.
Brent (64.50) looks bullish towards 68 while the concern is whether WTI (58.07) would be able to break above 59 or not. Looking at the close relation between the two, chances of directional divergence seems very unlikely. Either of the two may impact the other to follow the same direction but whether it would be bullish or bearish is a doubt just now. A break above 59 on WTI or a fall from there would be the driver for further movement in the crude prices.
Copper (3.1960) is clearly trading above immediate resistances and looks bullish for the near term. While above 3.15, the price is likely to test levels near 3.30% or higher in the medium to long term.
FOREX
Dollar-Index (93.355) saw a low of 93.16 yesterday, but is currently trading around 93.35, slowly approaching 93 (shown as support on daily & 3 day candles). Likelihood of the index staying in the 93.0-93.5 range during the holiday season is high, while a break of 93 could take it towards 92.5, acting as support on weekly line charts.
Euro (1.1874) reached a high of 1.1902 yesterday, thereby testing the crucial resistance near 1.19 earlier than we had expected. It is currently trading below resistance near 1.1875, and much like the Dollar Index, could see levels being maintained near 1.185-1.190 in this holiday season. A decisive move (be it a move past resistance at 1.19 or a break of support at 1.17, should happen in January).
Dollar-Yen (113.43) is close to testing resistance at 113.5 on the daily candles and with a further possible rise in US-Japan 10 yr spread from the current 2.42 to 2.5 (See Interest Rates below), it could move past 113.5 to test resistance at 114 on the 3 day and weekly candles, post which a corrective dip is likely.
Pound (1.3367) moved within a narrow range yesterday (1.3372-1.3420) and little intra-day movement could now be expected, given the beginning of the holiday season. There might be some support near 1.335 on the daily candles which might restrict the possible range of oscillation to 1.335-1.345,
Rupee (64.115) could be expected to stay above 64 for a couple of sessions as the Nifty’s rejection continues to levels near 10300-10400, post which a bounce in the Nifty to 10500-10550 could see simultaneous testing of 63.90 by Rupee next week.
INTEREST RATES
The rise in the US yields continues as the US passed the tax bill yesterday. Sharp rise in the 5YR (2.23%), 10YR (2.49%) and the 30YR (2.87%) from previous levels of 2.21%, 2.45% and 2.81/% respectively. The 10YR could face some resistance near 2.50% but we would have to see if that holds or is broken on the upside in the next few sessions. The 30YR is likely to target levels of 3.00% in the sessions to come.
The Japan yields have also risen sharply in the last couple of sessions. The 10Yr (0.07%) is up from 0.042% seen on Tuesday, while the 30YR (0.819%) is up from 0.80%. The yields look bullish for the near term.
Bullishness in both the Japan and the US yields have together raised the US-Japan 10YR yield spread (2.42%) and while above 2.37%, the yield spread could target levels near 2.50% in the coming sessions. This should pull up Nikkei and Dollar Yen to higher levels in the near term.
