STOCKS
Almost all stock indices look bearish for the near term and may continue to trade sideways or dip a bit in the coming sessions.
Dow (24283.11, +0.12%) moved up slightly but is overall stable for now. Crucial support to watch are 24000 and lower at 23600 which if hold may bring in another fresh up move in the medium term; else the index could continue to remain bearish for at least the next 5-6 weeks.
Dax (12234.34, -0.29%) dipped further yesterday and is indicative of a fall towards 12000 in the near term. View is bearish for this week and the next with little chances of seeing a sharp bounce to higher levels.
Nikkei (22225.44, -0.52%) was almost stable with no major movement. 21800 on the downside looks possible in the coming sessions before a bounce from there is seen.
Shanghai (2849.65, +0.18%) is also somewhat stable without any major movement just now. Chances of gradually testing 2750 on the downside is possible in the medium term.
Sensex (35490.04, +0.056%) and Nifty (10769.15, +0.062%) may look bullish only as long as they trade above 35250 and 10650 respectively. Narrow and small movements just now does not give much clarity on further direction.
COMMODITIES
Crude prices have risen sharply. Brent (76.53) and WTI (70.74) moved up sharply and may continue to rise towards 80 and 72 respectively from where a short dip is possible. Near term looks bullish.
Gold (1256.40) has dipped in line with our expectations and may test 1240 on the downside before stopping there. Near term looks bearish.
Copper (2.9780) has important support near 2.90/95 region which could possibly push back the price to above 3.0 in the near term.
FOREX
Euro (1.1655) : As per our expectation, Euro came down from just below the 1.1720-50 Resistance region yesterday. It could see a break below support near 1.1650-30 in this week, which would make it very bearish. In case it moves up again from here and breaks past 1.1750, it could be headed up towards 1.185 (previous high).
Dollar Index (94.62): As we had expected, support for Dollar Index near 94.1-94.2 held well yesterday and it is now bouncing again towards previous highs near 95.0-95.5. A break below 1.15 for the Euro in the next 1-2 weeks should correspond with a breach above 95.5 for Dollar Index.
Dollar Yen (109.94): Contrary to our expectation, Dollar Yen rose towards 110 once again, thereby negating it’s previous break of support on daily candles. Maybe a final test of levels near 110.50-110.75 is due before it becomes decisively bearish.
Euro Yen (128.14): Euro Yen is respecting support near 127.5 on daily candles and resistance near 129.5-130.0. With Dollar Yen looking like it could rise to test 110.50-110.75 in the next few sessions, a break below 1.15 (Euro) would be required for Euro Yen to break below 127.5.
Pound (1.3226): Pound is trading exactly midway in the downward channel on daily and 3 day candles. There are equal chances of it moving up to test resistance near 1.335 or moving lower towards 1.31. It’s target for the next 1-2 weeks could be horizontal support near 1.30 on weekly candles.
Dollar Rupee (68.245):Dollar Rupee could possibly open with a gap up today near 68.35/40 with some possibility of testing 68.50 on the upside. Note that 68.50 is an important level and we do not expect a break above this just now. Rather it could come off from 68.50 to again test levels near 68.30-25 by early next week.
INTEREST RATES
There seems to be no let up in the prevailing risk aversion sentiment as investors seem to be moving away from risky assets towards safer govt bonds, thereby keeping yields low.
US 10 year (2.88%), 30 Year (3.03%), 5 Year (2.75%), 2 Year (2.53%): US yields continue to remain stable around levels seen yesterday.
Repeating yesterday’s view for the US 10 Year and 30 Year bond yields for the weeks ahead:
Having broken support on medium term chart near 2.9%, the target for the 10 year yield in July could be lower support near 2.65%-2.70%.
Similarly, the 30 Year yield’s break of support near 3.05% on short term chart could be the beginning of a downtrend towards 2.9%.
