STOCKS
Bulls seem to be hesitating on the Dow, DAX and Nikkei, while the Bears seem to be in control in India, with the Sensex and Nifty underperforming most markets. Shanghai seems to be in no-man’s land while the KOSPI seems to be rising towards Resistance where it can run into profit-taking. Overall, most markets could give back some of the gains made in September so far, as the world approaches the US-China trade talks in October.
As mentioned, the Resistance at 27500 on the Weekly Candles on the Dow (27094.79, -52.29, -0.19%) might be tested next week, but could trigger a dip towards 26700-500.
Although the DAX (12457.70, +68.08, +0.55%) rose again yesterday, we see 12500 as a strong Resistance on the Daily Line and Weekly Candles, which could push the DAX down towards 12000-11800 over the next couple of weeks.
Yesterday we said that we should not grudge the Nikkei (22141.96, +97.51, +0.44%) a small pullback towards 21750-500. Initial signs of wanting to take rest after the 10.3% rally since 26-August can be seen.
The Shanghai (3005.99, +6.71, +0.22%) too might see a small dip towards 2950-25 in the near term, but might try to rise towards 3150 going into October. To that extent, maybe there is room for optimism on the US-China talks in October? Let us see.
The KOSPI (2085.69, +5.34, +0.26%) continues its steady uptrend for now and can test the important Resistance at 2125 over the next week or so, from where it can see some profit-taking.
Increasing bearishness on the Nifty (10704.80, -135.85, -1.25%) and Sensex (36093.47, -470.41, -1.29%) which are underperforming all markets, including Gold, Dow and even Shanghai. Maybe we will wait for one more day to see whether this duo manages to stage a bounce, because there is a modicum of Support near current level on the 3-day Candles. That said, the bearish overhang is strong.
COMMODITIES
Gold and silver continues to consolidate and looks mixed in the near term. Copper is holding above its key support but needs to gain strength and bounce strongly to avoid further fall. Oil has bounced but has key resistances ahead which can cap the upside. Both Brent and WTI might consolidate sideways for some time.
Gold (1501) remains stuck in between 1480 and 1520 and needs to break on either side of 1480-1520 which would set the direction of the next move. As mentioned yesterday, we prefer gold to break the range below 1480 and fall to 1460-1440.
Silver (17.85) remains mixed and has to rise past 18.25 to bring back the bullishness. While it remains below 18, it looks vulnerable to test 17.25 and even 17 on the downside in the coming days.
DC Copper (2.61) is managing to sustain above the key support level of 2.59 but is not gaining momentum for a strong bounce. As mentioned yesterday, while 2.59 holds, a range-bound move between 2.59 and 2.65 is possible. But a break below 2.59 will increase the downside pressure and drag copper lower to 2.52.
Contrary to our expectation, Brent (64.94) has moved up yesterday. A further rise to 67 and 67.50 looks likely if it breaks above 65.50 decisively. But while 65.50 holds, a sideways consolidation between 63 and 65.50 can be seen for some time.
WTI (58.8) has come-off from 59.50. The resistance at 59.35 mentioned yesterday is holding well. The near-term view is mixed. WTI can remain range bound between 57.50 and 59.50 and a break out on either side of this range will then decide the next move.
FOREX
Dollar index and the Euro continue to remain sideways. While the Dollar index looks mixed the bias on the Euro remains positive for it to break the sideways range on the upside. Dollar-Yen has dipped and can see a corrective fall before resuming its upmove. Aussie keeps the bearish view intact. Pound has broken its range on the upside as expected aided by the comments from the European Commission President Jean-Claude Juncker that a proper Brexit deal is possible. It is now bullish to see further rise. USDCNY hovers around 7.10 and looks mixed in the near term. Dollar-Rupee has risen after testing 71.05 yesterday in line with our expectation. A key resistance is at 71.48 which needs to be broken to see further upmove.
Dollar Index (98.28) continues to oscillate between 98 and 98.75 and has come-off yesterday within this range. As mentioned yesterday, we have to wait for a breakout on either side of 98 or 98.75 to see whether the dollar index is going up to 99-99.25 or fall to 97.50-97.25.
The Euro (1.1052) hovers at the upper side of its 1.0985-1.1090 range. We prefer the Euro to breach 1.1090 and rise to 1.1165-1.1180 in the coming days.
Dollar-Yen (107.92) has come-off below 108 and can test its key support level of 107.75. The preferred rise to 109-109.20 is getting delayed but is not been negated. We may even have to allow for a fall to 107.50 before we see a fresh leg of upmove targeting 109-109.20 on the upside.
The EUR-JPY (119.30) cross is stuck in between 118.85 and 120 and looks mixed in the near term. But as long as it trades above 118.5, the bias is bullish for the cross to break 120 and rise to 120.7-121 or even higher levels going forward.
Aussie (0.6784) remains below 0.6800 and keeps the bearish view intact to test 0.6765 and 0.6750 on the downside. The possibility of the current downmove extending even up to 0.6830 cannot be ruled out.
As expected, Pound (1.2538) broken its 1.24-1.25 range on the upside. It can now test 1.26 on the upside in line with our expectation. Support is in the 1.2500-1.2485 region.
USDCNY (7.0956) seems to lack strong follow-through buying above 7.10 and hovers around it. A strong fall below 7.08 is needed to negate the rise to 7.13-7.14 mentioned yesterday which in turn will bring back the bearishness into the picture. We will have to wait and see.
The Dollar-Rupee (71.3150) tested 71.05 on the downside as expected and has bounced sharply from there. 71.43 and 71.48 are key levels to watch today which if broken today can take the pair further higher to 71.64. While below 71.48, a dip to 71.05 can be seen again.
INTEREST RATES
The US Treasury yields have dipped further and are likely to extend the downmove. The German yields remain subdued and are coming closer to key support which needs to hold in order to avoid further fall. The 10Yr GoI has to sustain above 6.60% to see a further rise and avoid a fall to 6.54%.
The US 2Yr (1.74%), 5Yr (1.65%), 10Yr (1.77%) and 30Yr (2.22%) have dipped further. The 30Yr can test 2.15% while it remains below 2.25% and the 10Yr can test 1.75% and 1.68% in the near term. The 5Yr can dip to 1.58%.
The German yields 2Yr (-0.73%), 5Yr (-0.72%), 10Yr (-0.51%) and 30Yr (0.01%) have dipped further. The 30Yr has to hold above 0% to keep the upmove intact and avoid further fall. A break below 0% will increase the chances of revisiting -0.2% on the downside. The 10Yr on the other hand looks weak to test -0.60% if it fails to bounce from current levels.
The 10Yr GoI (6.6411%) dipped below 6.60% yesterday but bounced sharply from the low of 6.5725% to close higher. It needs to be seen if it can sustain higher above 6.60% in which case a further rise to 6.68%-6.70% is possible. But a break below 6.60% can drag the yield lower to 6.54%.
