STOCKS
Most indices saw a small relief rally yesterday, but could be vulnerable to more profit-taking while below the important Resistances mentioned over the last few days.
Slight rally in the Dow (24579.96, +51.74, +0.21%) yesterday. But, as mentioned, while below 25000, it would be prudent to look for 24000 on the downside.
On the Dax ( 11218.83, +8.52, +0.076%), we mentioned yesterday that ” Looking at the Weekly Candles, there are equal chances of a dip to 10900 as of a further rally to 11500.” It dipped to 11159 yesterday, but did not push lower, holding above rising trendline coming up from 10400. So, could it be that the market is not as bearish as might have been thought?
The Nikkei (20555.13, -109.51, -0.53%) saw a small rally yesterday, but is vulnerable towards 20400 and lower in the medium term while below 21000. Near term looks bearish.
The Shanghai (2585.37, 8.88, -0.34%) saw a low of 2560 yesterday, close to our target of 2550, but then recovered most of the fall. Today, the index is again trading lower and could re-test 2550. Perhaps it will range sideways between 2550-2650 for some days now, with a bit of a bearish bias towards a test of 2535 as well.
Both Sensex (35592.50, -64.20, -0.18%) and Nifty (10652.20, -9.35, -0.088%) broke below their support levels at 35600 and 10670 respectively and can fall further towards 35000 and 10400 over the next couple of weeks.
COMMODITIES
Gold and Silver are trading higher. Copper has moved up but could face resistance above current levels. Crude is also trading higher but upside could be limited just now.
Gold (1318.30) has risen sharply above 1300 as expected. 1320 is an immediate resistance which if holds could push back the price to 1300 or lower. Failure to sustain below 1320 would open up 1340/50 on the upside.
Silver (15.88) is also trading higher and could test resistance near 16.0-16.5.
Copper (2.7220) has rebound to levels above 2.70, indicating possible bullish momentum for the near term. A rise to 2.75 is on the cards for the next couple of sessions from where a corrective dip is possible.
The API reported a crude built of 2.098 mln barrels for the week ended 25 the Jan, much lower than the analyst expectations of 7.97 mln barrels.
Crude prices are trading higher today, having risen slightly yesterday’s dips.
Brent (61.23) and WTI (53.23) are trading higher but are tilted to the downside for the near term. Brent could fall in the near term towards 58 while below 62. WTI is holding well below horizontal resistance near 5450 on the weekly candles. While the price sustains below 54.50, WTI looks bearish towards 50.
FOREX
Currencies are mixed. Euro, Aussie, Yuan and Pound could see some strength against the US Dollar while Dollar Yen looks ranged. Overall some strength or stability is possible before a sharp movement sets in.
Dollar Index (95.76) is almost stable just now but looks bearish towards trend support at 95 on the 3-day and weekly candles. Thereafter a sharp rise from 95 could be expected in the longer run.
Euro (1.1438) is up slightly. Gradual up move in Euro could take it higher towards 1.150-1.155 levels in the near term.
Dollar Yen (109.33) is trading in narrow and small range just now unclear of the near term direction. While below 110, a fall towards 109-108 looks possible.
Pound (1.3094) has immediate support at 1.30 which if holds, could pull back Pound to 1.32/33 levels. Overall some ranged movement above 1.30 is possible in Pound for the near term.
Aussie (0.7193) has moved up on strength in commodities. But while the commodities may have upcoming resistances, the current strength in Aussie could be limited.
USD-CNY (6.7123) came off, breaking below our expected support at 6.72. The pair looks strongly bearish just now and could fall further towards 6.65. Near term looks bearish.
Dollar Rupee (71.12) closed below 71.25 after attempting an intra-day high of 71.21 yesterday. While 71.21 holds, we could see ranged movement within 70.90-71.25 region (revised lower limit from 70.80 to 70.90). A break above 71.25 would open up chances of re-testing higher resistance zone of 71.40/60.
INTEREST RATES
There is Resistance coming up near current levels on a number of the Yield Tenors as well as Yield Spreads. Together these suggest that Yields and Spreads can come down towards 2.50% (2Yr); 2.45% (5Yr); 2.60% (10Yr) and 2.85% (30yr). So, the dip that we were expecting (as mentioned in our 31-Dec-18 treasury report) can still take place, albeit with a little delay.
The 10Yr GOI (7.5262%) is looking bearish just now and could fall towards 7.50/48% before attempting a bounce from there.
