STOCKS
Dow and Dax face resistance just above current levels. A break on the upside or a fall would be driving the next course of direction for the medium term. Nikkei is likely to be stable before falling sharply in the longer run while Shanghai looks bullish just now. Indian stock indices looks bullish with immediate support below current levels.
Dow (24799.98, -0.055%) is headed towards resistance near 25000 and while that holds, a small corrective dip is possible. It would be crucial to see if the index is able to break above 25000 to move higher towards 25250+ levels. That if seen would be an important trigger for medium term bullishness.
Dax (12787.13, +0.13%) attempted to rise above 12900 but could not sustain there. The current daily candle with a spike on the upside could indicate some bearishness for the coming sessions with a possible target of 12600-12500. Near term looks bearish.
Nikkei (22575.54, +0.16%) is trading just below the trend resistance as clearly visible on the 3-day charts. Some more sessions of sideways to upside is possible before a sharp corrective fall is seen. Medium term looks bearish.
Shanghai (3116.03, +0.059%) is trying to move up slowly from 3050 support. While the rise continues, the index could move up towards 3150-3175 in the near term.
Nifty (10593.15, -0.33%) is just above immediate support and could bounce back towards 10750 in the near term. Sensex could start moving up towards 35500. Only on a downside break below the current trend supports, we would revisit the lower targets.
COMMODITIES
Worries about supply disruptions in the key Copper producing region pulled up Copper prices. Precious metals are almost stable while crude prices could pose a rise in the coming sessions.
Brent (75.36) tested 73.81 before again moving back to current levels. While above 74, there is scope to move back to 77-78.
WTI (65.70) is trading higher today. It is possible that the crude price falls back from 66 back towards 65.50 in the near term before moving higher in the longer run.
Gold (1297.28) continues to trade within 1285-1310 region. While support in the 1275-1285 region holds, Gold could attempt to move up in the medium term but a failure to rise past 1310 could eventually push down the prices to 1375/70 levels.
Copper (3.1964) finally saw an upward break from the narrow range of 3.05-3.15 region which we thought would come after another down move to 3.05. News states that the rise is attributed to concerns about the potential supply impact of wage negotiations at the world’s biggest copper mine. The union at BHP’s Escondida facility in Chile said on Friday that it had started the latest round of negotiations with a proposal which includes a bonus of about $34,000 per worker. There could be some corrective dip in the coming sessions but overall a rise towards 3.30 looks possible in the longer run.
FOREX
Dollar index (93.84) has broken below channel trendline on daily candles and has important support at the 21 days MA near 93.65. A break below 93.65 could make it bearish till 93.3-92.8. A break of 92.8 would be very bearish in the medium term.
Euro (1.1723): A breach above 1.175 (21 days MA) would take the Euro higher to 1.181. If 1.181 is breached as well, it could be signs of bullishness for the medium term.
Dollar Yen (109.82) had broken resistance on daily candles near 109.6 yesterday and while above 109.8 (21 days MA), could go on to test crucial long term resistance on weekly line chart near 111. A test of 111 (max 112) should then produce a dip.
Euro Yen (128.74): As mentioned yesterday as well, a bullish Dollar Yen and an upward creeping Euro is taking Euro Yen closer to 129.5-130.0 (crucial resistance level on weekly candles). After a test of 129.5-130.0, Euro Yen could dip. A breach of 129.5-130.0 could make it bullish for the medium term.
Pound (1.3407): Against our expectation, Pound again tested a high near 1.341, thereby testing the 21 days MA. It could either dip from here or from resistance on daily candles near 1.345. A breach of 1.345 could take it higher towards 1.355-1.360.
Dollar Rupee (67.15) : Might dip to 67.10 and lower in case of failure to rise above 67.25 in early trade.
INTEREST RATES
Current yields: US 10 Year (2.93%), 30 Year (3.09%), 5 Year (2.77%), 2 Year (2.49%)
US yields haven’t shown any significant movement yet in this week, which might be due to the fact that markets are waiting for the CPI data release and the FOMC meet next week. Moreover, a rate hike is more or less certain and would already have been factored in by the markets.
Any sign of dovishness from the Fed could lead to another dip in US yields and bring into play a downmove towards the following support levels:
2.55% (10 Year), 2.9% (30 Year) and 2.2% (5 Year)
German 10 year yield (0.37%) is testing support on short term chart and could rise from here.
