STOCKS
Although we had been bearish on the Dow and DAX, both have moved up well on Friday, along with shanghai and Nikkei. No profit-taking has set in yet.
The Dow (24706.35, +336.25, +1.38%) rose strongly on Friday and now looks likely to move up towards 25000-250. NOTE, however, that the USA has a holiday today.
Contrary to our expectation of a fall towards 10700, the DAX (11205.54, +286.92, +2.63%) has broken strongly above 11000. This possibly opens the upside to 11400-600 now.
while we remain long-term bullish on the Shanghai (2609), we have to be a little cautious about Resistance at 2627 (21-MA on Weekly Line chart). A break above that is needed to propel it higher.
The Nikkei (20748) has validated our overall bullishness and may have some more room on the upside towards 21000-200 while above 20300, aided by a weaker Yen (109.64)
While the other indices moved up well on Friday, the Sensex (36386.61) and Nifty (10906.95) did not move at all on Friday. As mentioned, proper bullishness can set in once crucial Resistances at 36500 and 11000 respectively are broken.
COMMODITIES
Gold and Silver could be slightly bearish while Copper and Crude prices could see some upside.
Brent (62.77) and WTI (54.09) have risen and are trading higher just now. Immediate resistance above 62.50 is now seen at 64 which need to break on the upside to indicate medium to long term bullishness. WTI has similar resistance near 55-56 region.
Brent-WTI spread (8.71) is down from 9.01 seen on Friday. As expected the spread is falling and could test 7.55-7.15 in the near term.
Gold (1282.20) and Silver (15.37) are trading lower. Gold has been trading sideways in the 1280-1300 region for a few session now and while the resistance near 1300 holds, we could see a fall towards 1250 in the near term. Silver is likely to come off towards support near 15.25-15.20 before bouncing back from there.
Copper (2.7055) has scope of rising towards 2.75/77 levels on the upside while attempting a rise above 2.70. Near term looks bullish.
FOREX
Dollar Index (96.30) is trying hard to rise towards daily resistance near 97.25. We could see a small dip from 96.50 before the index moves higher towards 97.25 in the medium term.
Euro (1.1375) has immediate trend support at 1.1350 and while that holds, a bounce in the near term could be possible back to 1.14-1.15. Near term is bullish while above 1.1350. Only on a break below this, we would expect a fall towards 1.12.
The Euro-Yen (124.78) is trading in the 123.60-125.20 region and could be sideways ranged for some more sessions unless a sharp sustained break is seen on either side.
Dollar Yen (109.66) is rising and could target 110.55 in the near term. On the weekly candles, the pair looks bullish for the medium to long term with enough room on the upside towards 113-114 levels. View is bullish while above 107-108.
Pound (1.2861) is trading low but could bounce back from 1.28 back towards 1.30 in the coming sessions. In the medium term, while resistance at 1.30 holds, Pound could come off towards 1.2750. Near term could see a rise towards 1.30 before again falling off from there.
Aussie (0.7166) has been trading sideways for the last 5-6 sessions and while immediate resistance holds near 0.73, Aussie could gradually come off towards 0.71-0.70. There could be some scope of testing 0.73 on the upside while the view is bearish for the medium term.
USD-CNY (6.7879) has been rising as expected and looks bullish towards 6.83 in the near term.
Dollar Rupee (71.19) is likely to remain below 71.40 today, trading between 70.90 and 71.40 for a couple of sessions. Above 71.40, there is scope for the pair to test 71.60.
INTEREST RATES
Further rise in US yields on Friday, in line with expectation. In fact, the 5Yr (2.62%, up from 2.57%) has pulled ahead of the 2Yr (2.61%, up from 2.57%).
With the 10Yr (2.78%, up from 2.75%) and 30Yr (3.10%, up from 3.07%) both rising by 3bp, the 30-10 Spread (0.32%) was stable. The 30-5 Spread (0.48%) has come down a bit from 0.50%. Further dip towards 0.30% and 0.25% and 0.45% are likely on the 30-10 Spread and 30-5 Spread respectively.
The German-US 2Yr Spread (-3.15%) and 10Yr Spread (-2.52%) have drifted lower as the US yields have risen. Some more downside towards -3.20% and -2.55% is likely.
Also, the US-Japan 10Yr Spread (2.78%) is continuing to rise, supporting the rise in Dollar-Yen.
The 10Yr GOI (7.5959%) seems to be trying to break above 7.59%. If the rise sustains, we can see a further rally towards 7.70%.
