STOCKS
While we are inclined to be bullish for most Equity markets in the long term, we are alive to the chances of a dip in the near term in most indices, which might provide a decent opportunity to go Long.
For the Western hemisphere, the Resistances to watch are near current level (24001.92, +122.80, +0.51%) on the Dow on the 3-day line chart, near 11050 on the DAX (10921.59, +28.27, +0.26%) on the trendline coming down from near 12500 since Sep-Oct. Unless broken strongly, these Resistances could push the markets down a bit in the near term.
We are more bullish on the Nikkei (20306, +142.36, +0.71%) which has a long-term trendline Support on the Weekly Line chart; and the Shanghai (2533.71, -0.05%) which has a long-term Support at 2425. Within this, there is some chance that both of these could see a small near-term dip before they are bought again more strongly.
The Sensex (36106, -0.29%) and Nifty (10821.60, -0.31%) have dipped a little, suggesting that the market has not as yet fully made up its mind on bullishness. The outlook for India is a little more mixed, compared to the Oriental and the Occidental regions.
COMMODITIES
Metals are almost stable while crude prices continue to rise. Resistances above current levels could hold which could push the commodity prices to lower levels soon.
Brent (61.40) and Nymex WTI (52.44) continue to trade higher. Brent could test resistance near $62.30 in the next couple of sessions if the rising momentum continues while WTI may face rejection from $54.
Gold (1291.10) is stuck above support at 1280 and could trade within 1300-1280 region for some more sessions. While 1280 holds, Gold could attempt to test 1320 on the upside but is likely to decline from there in the medium term. We may expect some sideways movement within 1280-1300/20 before a sharp fall is seen in the longer run.
Silver (15.68) is stable below 16. Near term looks ranged for now within 15.5-16.0 levels.
Copper (2.6450) has come off from 2.6705 and while 2.70/68 holds, copper could fall back to 2.60 or even lower in the coming sessions. Near term is bearish while below 2.70/68.
FOREX
Currencies are almost stable with important resistances above current levels. Aussie and Euro looks bullish while the others look weak against the US Dollar.
Euro (1.1523) could have scope of testing 1.16-1.17 in the near term which could be a decent resistance on the upside. Dollar Index (95.39) has some scope of coming off towards 94.50/20 in the near term while trading below 95.50. Only a sustained bounce above 95.50 would negate a fall towards 94.50/20.
The Euro-Yen (124.75) is trading below 125.20 just now and while that holds, we could see some stable movement in the 124-125.20 region. A break above 125.20 is needed to turn bullish and take the prices higher towards 128 in the longer run.
Dollar Yen (108.28) bounced back from levels near 107.91 seen yesterday. 107-108 is a decent support which if holds could take the pair towards 110 soon. Before that we could see some sideways consolidation in the 107-109 region. Long term weekly support is holding near 107.
Pound (1.2791) is stable after testing 1.28 on the upside. A sustained break on the upside is needed to make it more bullish towards 1.29-1.31. While below 1.28, we cannot negate a fall towards 1.270-1.265.
Aussie (0.7196) has been continuously and slowly rising every session and could soon target 0.73 on the upside. Aussie looks bullish for the near term.
USD-CNY (6.7625) has fallen quite a bit and is looking bearish for the near term targeting levels of 6.73/71.
Dollar Rupee (70.42) could trade within 70.20-70.60/80 in the near term. A rise towards 70.60/80 (possible extension to 71) looks more likely while supports at 70.20 and 70.40 holds.
INTEREST RATES
US Bond Yields (2Yr 2.56%, 5Yr 2.55%, 10Yr 2.73% and 30Yr 3.05%) have moved up a little yesterday, contrary to our expecation of a dip. Could it be that the Support at 2.45% on the 5Yr is stronger than might have been anticipated?
We note that the US Yield Curve is steepening for now, with the 10-5Yr Spread (0.18%) breaking above declining trendline coming down from 0.59% (Dec-16) and the 30-10 (0.32%) and 30-5 (0.50%) looking like they can move higher to 0.35% and 0.60% respectively. This suggests the fears of growth slowdown might subside a bit.
Keep an eye on the US-Japan 10Yr Spread (2.71%) which could be bouncing off a long-term Support trendline coming up from 1.62% in 2016. A further rise here could help pull Dollar-Yen higher.
We are not too clear about the 10Yr GOI (7.476%), which may/ may not move higher to test Resistance at 7.59%.
