STOCKS
Low Crude prices have pulled down energy sector stocks while the tech stocks seem to be rallying.
Dow (21410.03, -0.27%) has come off in line with our expectation and while the important resistance near 21500 holds, the index could be headed towards 21300 soon. 21500 is likely to remain as a medium term top for now.
Dax (12774.26, -0.32%) came off to test immediate support near 12700 as expected but bounced back sharply to close at higher levels. While 12700 holds, we may expect a rise towards 12900 again in the coming sessions. A break below 12700 is necessary to ignore immediate rise from current levels.
Shanghai (3169.41, +0.42%) tested 3172, our upside target mentioned yesterday. Shanghai looks positive for the medium term and could move up eventually towards 3200 by the end of next week possibly. An interim dip towards 3155 is possible in the near term.
Nikkei (20118.25, -0.10%) is in a corrective phase after the sharp rally from 19970 to 20090 on Monday. The current fall could extend towards 19990 before again trying to move up towards 20300 levels.
Nifty (9633.60, -0.21%) could possibly move up today but may remain within 9600-97000 region for some more sessions. Overall near to medium term looks bullish.
COMMODITIES
Gold (1254) moved marginally higher yesterday and hovering around its key support of 1242-45. If 1245 holds, a quick bounce towards 1262 and 1295 can’t be ruled out. Otherwise it remains in a slow corrective move which may take it to the support of 1242 and 1232 respectively. We will remain bullish on gold while it is trading above 1230 levels. Silver (16.59) is also trading above its support of 16.50 and could be ranged within 16.50-16.90 regions.
Copper (2.59) is trading within the narrow range of 2.56-2.67. Only above 2.67, higher resistances of 2.84 can come into consideration. We will remain bullish on copper while it is trading above 2.55 regions.
Oil prices had failed to close higher irrespective of weekly U.S crude and gasoline stockpiles fell. Investors are now looking for more signs of production cut by OPEC and other producers to stop the free fall. Brent (44.91) and WTI (42.65) are going to test their respective supports of 43.20 and 40.80 respectively. Both Brent and WTI are highly oversold in near term time frame and we will be assured of strength of Brent and WTI only when a firm and sustainable closing above 46.30 and 44.50 are made by both of them.
FOREX
Dollar Index (97.49) is in a minor corrective mode which may end by 97.45-35 and the next leg up can push it to 98.10-40.
Euro (1.1168) remains stuck in the broader range of 1.1100-1.1300 but the immediate upside may be limited to 1.1200 levels with the major support unchanged at 1.1100-1.1090.
Dollar-Yen (111.08) correction continues but the minor decline is not expected to go beyond the support of 110.60-50 from where the larger uptrend may resume for the higher targets of 112-113.
Pound (1.2665) has already enjoyed a corrective bounce from 1.2600 to 1.2700 exactly in line with our expectations but for a reversal, a break above 1.2820 is required. For the next few sessions, the currency may trade sideways in the range of 1.2540-1.2820.
Contrary to expectations, Aussie (0.7550) has weakened below the support of 0.7570-60 which implies a loss of upside momentum. The correction may take it to the major support of 0.7490 before a short covering bounce emerges.
Dollar-Rupee (64.52) opened strong but lost almost all the gains made by the closing. The resistance of 64.70-75 has held well so far and keeps the pair in the broader range of 64.10-70 as expected.
INTEREST RATES
The US 10-5Yr (0.39%) has broken below immediate support at 0.40% but could bounce back from 0.38%, the earlier low seen in Aug’16. The US yields by themselves are trading lower and the medium term charts are working well just now. We could see a pause in the falling yields possibly in the early-next week. The 5Yr , 10YR and 30YR are trading lower by 1bps at 1.76%, 2.16% and 2.71% respectively.
The US-Japan 10Yr (2.09%) spread is looking bearish for the medium term and could move lower towards 2% in the coming sessions.
The German-US 10YR (-1.88%) could re-test levels of -1.85% on the upside before again coming off towards -1.95% in the near term. For now the yield spread is likely to consolidate sideways within the -1.85% and -1.95% region.
