STOCKS
Dow has risen past its near-term resistance and is bullish to move further higher. The market seems to have ignored the President Trump’s impeachment. DAX and Nikkei continue to look weak to dip in the near-term. Shanghai can consolidate sideways as the key resistance continues to hold well. Sensex and Nifty are moving higher in line with our expectation and are keepiug our bullish view intact.
Dow (28376.96, +137.68, +0.49%) has risen past 28330 and is gaining strength. It can test 28430 and a break above it will pave way for a further rise to 28750-28770 next week. In case if 28430 hold the Dow can remain stuck in a narrow range between 28250 and 28430 for a few sessions and then move higher.
DAX (13211.96, -10.2, -0.08%) fell below the 13200-13180 support zone but has bounce-back well from the low of 13140. The near-term is negative as long as the DAX remains below 13315 and a fall to 13100 and 13000 is still possible.
Nikkei (23802.76, -62.09, -0.26%) continues to move lower in line with our expectation. As expected, the index can now test 23650-23600 on the downside and then can reverse higher again.
Shanghai (3012.30, -4.77, -0.16%) remains lower but is managing to sustain above 3000. As mentioned yesterday, we may see the index stuck in between 3000 and 3050 for some time. A breakout on either side of 3000 or 3050 will then decide whether the Shanghai will go up to 3100 or fall-back to 2950.
Nifty (12259.70, +38.05, 0.31%) and Sensex (41673.92, +115.35, +0.28%) continue to move higher in line with our expectation. Our bullish view is intact. As we have been mentioning over the last few days, Sensex can target 41800-42000 and Nifty can test 12300-12350 on the upside.
COMMODITIES
Trades in Gold and Silver for the last 4-5 sessions have been stable with least volatility or volume. This could possibly be an indication of a sharp break out on either side of the narrow range trade soon. Crude and Copper prices look bullish for the near term.
Gold (1482.70) remains to trade in the narrow 1495-1470 region but could soon see a break on either side. Our preferred direction would be downside for a test of 1460-1440 in the medium term.
Silver (17.10) is stable and could similarly see a sharp break possibly on the downside while resistance near 17.25 holds. Only if 17.25 breaks on the upside we would negate our current bearish view.
Brent (66.60) and Nymex WTI (61.10) continue to move up towards our mentioned targets of 68 and 63 respectively. Near term looks bullish.
Copper (2.8215) is headed towards 2.85 which could be tested in the next couple of sessions. Thereafter, it would be important to see if 2.85 holds to push back prices towards 2.75 again but overall medium to long term view is bullish for an eventual test of 2.95-3.00.
FOREX
Dollar Index (97.43) has risen and could further head towards 97.75 as mentioned yesterday. While Dollar Index rises, Euro (1.1115) is likely to head lower towards 1.1100-1.1080 in the near term.
Dollar-Yen (109.32) has important resistance near 109.78 and higher near 110 which is likely to hold and produce a dip towards 109 or lower in the medium term. Watch price action near current levels or at higher resistances near 109.78 and 110. Overall view is stable just now with a possible dip in the medium term.
EUR-JPY (121.52) is likely to dip towards 121 as mentioned yesterday. Upside could be limited to 122.78/86 just now.
Pound (1.3018) has broken below support at 1.3048 and is trading lower just now. A break below 1.30 would turn bearish towards 1.28.
Aussie (0.6892) has moved up as expected and could test 0.69 in the next few sessions. In the medium term we cannot negate a possible test of 0.68.
USDCNY (7.0130) has moved up as expected and could rise towards 7.0200-7.0270 in the coming sessions next week. Overall trade within 7.03-7.00 (upside limit revised from 7.02 mentioned yesterday) looks likely for the near term.
Dollar-Rupee (71.04) closed above 71 yesterday. The higher closing rates since the last few sessions indicate a slow movement towards the upside which could test 71.25/30 before a corrective dip is seen from there.
INTEREST RATES
The US Treasury yields are coming closer to their crucial resistances which are expected to hold and drag it lower again. We will have to keep a close watch on that. The German Yields have moved up sharply at the far-end in line with our expectation and are keeping our bullish view intact. The 10Yr GoI is likely to face resistance and fall-back again. RBI’s announcement to buy long-term bonds and sell the short-term is likely to drag the 10Yr yield lower.
The US 2Yr (1.63%), 5Yr (1.73%), 10Yr (1.92%) and 30Yr (2.35%) Treasury yields remain higher and are getting closer to their key resistances. The 30Yr is poised at the crucial resistance level of 2.35% while the 10Yr has resistances at 1.95% and then at 2%. We expect these resistances to hold and drag the 30Yr lower to 2.20% and 10Yr to 1.77%-1.75%
The German 2Yr (-0.64%) remains stable while the 5Yr (-0.52%) yield has inched slightly higher. At the far-end the 10Yr (-0.24%) and 30Yr (0.28%) have risen sharply and are keeping our bullish view intact. As we have been mentioning for some time, the 10Yr can move up to -0.20% and -0.10% while the 30Yr has the potential to see 0.40% on the upside.
The 10Yr GoI (6.7517%) sustained above 6.70% and has bounced yesterday. However, it is likely to face resistance at 6.80% which can drag it lower again to 6.70%. We expect the yield to break 6.70% and fall to 6.65%-6.60% and even lower. The RBI’s announcement yesterday to buy the long-term bonds and sell the short-term is likely to drag the 10Yr GoI lower and keep our bearish view intact.
