STOCKS
The indecision we noted in the markets on Tuesday, just before Diwali, transformed into a relatively strong rally as the Dow (26191.22) jumped up after the Democrats took House of Representatives from Trump in the mid-term elections. As expected, this also pulled other markets higher. Now, the bearishness is reduced, but proper bullishness is not here yet.
The strong rise in the Dow (26191.22) from 24122.23 (29-Oct) revives longer term bullish possibilities. At the least, it puts the Bears on a back foot for the time being. While the Fed has maintained its outlook on promised rate hikes going forward, it will be interesting to see if the plunge in Brent (70.64) below 72 will show up well enough in numbers going forward to make the Fed hold its horses beyond December. That could trigger proper bullishness. Till then, the Dow could trade sideways between 25000-27000 for the next several days.
Even the DAX (11527) has been able to stave off the expected fall to 11000, and might try to move up towards 11800 over the next couple of weeks.
In Asia, the Nikkei (22297) had risen to a high of 22600 yesterday, but is seeing a bit of profit-taking today. It may need to rise past 22800 for proper bullishness, but at the least, the bearish possibility below 21200 is reduced. Keep an eye on the KOSPI (2086) to see if it is able to rise past 2100-2120. It could lead to good upmove if that happens.
The Nifty (10598.40) trades near 10585 on the SGX, just below the crucial resistance at 10600. Perhaps it will try to rise some more towards 10800 or even 11000.
COMMODITIES
Brent (70.73) is breaking below the 55 weeks MA at 71.66 and approaching its previous low of 70.30. A week close below the 55 weeks MA would increase bearish possibilities for the near term. On the daily and 3 day line chart, we can still see some chances of horizontal support at current levels to hold. Moreover, 70 could also be an important psychological level. So let’s wait and watch if this level actually breaks or not.
WTI (60.59) is approaching support near 58-60 on 3 day and weekly line chart which is expected to hold in the near term, leading to a rise soon.
Gold (1221) has broken below support on daily candles near 1225 and could now move lower towards 1215 in the next couple of sessions. A break below 1215 would again bring 1200 into play.
Copper (2.726) : A gradual fall towards support near 2.700-2.675 in the next week is seeming likely.
FOREX
Watch the 21 week MAs @ 1.304 and 0.727 on Pound and Aussie. USDINR might still find it difficult to break below 72.44.
Dollar Index (96.695): After the Democrats took hold of the House in the midterm results day before yesterday, the Dollar Index had weakened to 95.68 (thereby testing support on daily candles); however, the FOMC policy yesterday has again strengthened the Dollar and a rise towards 97.25 by next week now seems likely.
Euro (1.1355) strengthened to 1.15 after the US midterm elections, but it has come off from there and now, while it stays below 1.145, a fall to 1.13 looks likely to happen in the next week.
Dollar Yen (113.85) is testing resistance on 3 day and weekly line chart near 113.9. Preference is for it to come off from here immediately, or else, it could rise a bit more till 114.5 before coming off from there.
Euro-Yen (129.28) has immediate support near 129.20-00, which if breaks, would shift the bias on Euro Yen to the downside. We need to see if it closes the week below the 21 weeks MA (129.40) or above it. A week close below 129.40 would be bearish. The preference for next week is for the upside to be capped near 1.30.
Pound (1.3053) almost tested resistance on daily candles yesterday by seeing a high of 1.3175 and has now come off from there. There is immediate support near 1.305 on daily candles, which it would have to break to turn bearish. A close below the 21 weeks MA (1.3040) would increase the bearish bias for next week.
Aussie (0.7242) tested horizontal resistance on daily candles near 0.73 yesterday and has now come off from there. Like the Pound, the 21 weeks MA at 0.7270 now holds a lot of significance for the Aussie as well. A week close below it could still lead to bearishness in the near term.
Dollar Rupee (72.66): A break below 72.44 might still be difficult in the aftermath of Dollar strength after the FOMC.
INTEREST RATES
Although the FED did not raise rates yesterday, a hike in December is a near certainty now. The US 10Yr (3.22%) is likely to move up towards 3.30% over the next few days, which is a strong Resistance and can hold for some time. The Yield Curve has flattened a bit again, with the 10-5 Spread dropping sharply to 0.14%, from 0.18% earlier this week. The 30-10 Spread (0.21%) has also come off from 0.25%. The Near-end of the Curve is rising and is reflected in the US Libor which continues moving up sharply.
As expected, the German 10Yr (0.45%) trades higher and the Japanese 10Yr (0.12%) steady. Both can be expected to move up towards 0.53% and 0.16% respectively.
We need to see whether the Indian 10Yr GOI (7.7983%) will be able to dip below 7.75% now that Brent has dropped below 72 also.
