STOCKS
The resistances on the Dow (24700-25000) and DAX (11200-11350) that we had mentioned yesterday are holding well as of now. Unless these resistances are breached, the indices are likely to continue their sideways consolidation for some more time. Nikkei sustains higher and have room to move up in the near-term. Shanghai can remain stuck in a narrow range. Sensex and Nifty seems to lack strength and remains vulnerable to fall further unless they rise past 31000 and 9000 respectively.
Dow (24206.86, −390.51, -1.59%) has come-off giving back some of the gains made on Monday. The 24700-25000 resistance region seems to holding well now. A break below 24000 will negate the chances of any further rise and will drag the Dow lower to 23000-22500 again. In that case the 22500-25000 range will continue to remain intact for some more time. As mentioned yesterday, a strong rise past 25000 is needed to become more bullish to see further rise to 26000.
DAX (11075.29, +16.42, +0.15%) tested the resistance at 11200 and has come-off from there. While below 11200, the chances are high for it to dip below 11000 and test 10800-10700 in the near-term. As mentioned yesterday, 11200 and 11350 are important resistances and a strong rise past 11350 is needed to gain momentum and target 11500 and higher levels.
Nikkei (20584.64, +151.19, +0.74%) remains higher and is likely to head towards 20800 now as mentioned yesterday. . A strong break above 20800 will then take the Nikkei higher to 21000 and 21500 eventually in the coming days. 20500 and 20000 will continue to serve as good supports now.
Shanghai (2891.40, −7.17, -0.25%) seems to lack momentum to breach 2900. As such a narrow sideways consolidation between 2900 and 2875 looks a possibility now. A breakout on either side of 2875-2900 will then determine whether the Shanghai will go up to 2925-2950 straight away for will fall to 2850-2825 first before resuming the overall uptrend.
The bounce in the Sensex (30196.17, +167.19, +0.56%) and Nifty (8879.10, +55.85, +0.63%) seen yesterday seems to lack momentum. Nifty failed to sustain the break above 9000 and the Sensex on the other hand remained below 31000. This keeps the chances high of seeing a fall to 29000 on the Sensex and 8500 on the Nifty while they remain below 31000 and 9000 respectively. A break below 30000 on Sensex and 8800 on Nifty can trigger this fall.
COMMODITIES
The American Petroleum Institute (API) estimated a crude inventory draw of 4.8mln barrels for the week ended 15th May against the analyst expectations of seeing a 1.15mln barrels build. Crude trades slightly lower and could dip a bit while immediate resistances hold. Gold and Silver are on a rising track and look bullish for the near term. Copper is sustaining above 2.40 and while the rise holds, near term could be bullish.
Brent (34.74) and Nymex WTI (31.95) have come off a bit. We expect resistance near $37.50 and $33 to hold on Brent and WTI respectively and lead to some more dip in the near term.
Gold (1753.70) and Silver (18.08) dipped yesterday to give some indication of a possible fall in the near term but have picked up momentum again to rise back. Note that Gold has interim supports near 1740 and 1720 which if holds could keep Gold higher towards 1760-1780-1800 in the medium term. A break below 1720 is necessary to turn bearish for Gold. Silver, on the other hand has risen sharply and could be slowly headed towards 19 before a fall from there is seen. Near term looks bullish for Silver and Gold while above 16.5 and 1740/20.
Copper (2.4155) has dipped a bit but continues to remain above 2.40 and while the rise sustains, we may expect slow and steady rise in Copper towards 2.45/50.
FOREX
Dollar Index trades lower while Euro and Dollar Yen trades higher. Pound looks bullish too while Aussie could be stable just now. EURJPY and Yuan could also trade stable just now while USDINR could test crucial support at 75.60 from where a break or bounce would set further course of direction.
Dollar Index (99.45) looks bearish towards 99.0-98.73 before a bounce is seen from there. Range of 100.75/55-99.0/98.70 looks likely for the medium term.
Euro (1.0940) has risen well above 1.09 and could re-test recent high of 1.0976 in the next 1-2 sessions. A break above that would be needed to take it higher towards 1.10.
Dollar-Yen (107.77) rose sharply yesterday to levels above 108 after the BOJ called for an unscheduled meeting on 22nd May’20 for a possible new measure to provide funds to financial institutions. A possible fiscal stimulus package of about 20% of Japan GDP is stated in news sources. Strangely, Dollar-Yen if continues to rise from here would be in negative correlation with Dollar Index and positive correlation with Gold for sometime which is normally otherwise. While our expected rise to 108 has been seen, the pair has come off from there just now. Above 107.50, the pair looks bullish for a re-test of 108+ levels in the near term. Upper target of 109 could be looked at for the coming sessions.
EURJPY (117.87) has been moving up well. A rise above 118 if seen within the next few sessions could take it higher towards 119 eventually. Before that interim resistance is seen near 118.38 which if holds could keep the cross pair lower.
Aussie (0.6545) is likely to trade in the 0.65-0.66 region for some more time. While above support at 0.65, we may look for a steady rise in the near term.
Pound (1.2261) has risen contrary to our expectation of a further fall from here. While above 1.21, we may look for a test of 1.24 in the near term.
USDCNY (7.1052) has been trading around 7.10 unable to give a clear picture of a break or rise above the level. A sustained fall below 7.10 would be needed to look for a fall towards 7.09/08 as mentioned yesterday failure of which could keep the pair in the 7.1250-7.10 region for sometime.
USDINR (75.6450) closed at the lower end of our mentioned 75.60-76.00 range but it would be important to see if the range manages to hold for today also or breaks below 75.60 to turn bearish towards 75.50/40 in the next 1-2 sessions. Charts suggest support at 75.60 now which if holds could produce a bounce back towards 75.80/90-76.00.
INTEREST RATES
The US Treasury yields remain higher and are slowly turning bullish for the near-term. A strong break above the immediate resistances will confirm the same and pave way for further rise eventually. The chances of a fall that we had been expecting are getting reduced. The German yields have room on the upside to test their resistances and then can resume their overall downtrend. The 10Yr GoI is coming down to test its crucial support zone from where we expect it to bounce-back again.
The US 2Yr (0.17%) Treasury yield remains stable while the 5Yr (0.34%), 10Yr (0.69%) and 30Yr (1.41%) have dipped slightly. The view remains the same. 0.75%-0.80% on the 10Yr and 1.45% on the 30Yr are the crucial resistances to watch in the coming days. A strong break above these resistances will be bullish and see the 30Yr rising towards 1.70% and the 10Yr targeting 1% on the upside in the coming days. It will also negate our bearish view of seeing 0.60%-0.58% (10Yr) and 1.20% (30Yr). Overall the bias is turning towards bullishness which will need some confirmation.
The German 2Yr (-0.69%) and 5Yr (-0.67%) yields have inched higher while the 10Yr (-0.47%) and 30Yr (-0.05%) have dipped slightly. We retain our view of seeing a near-term rise before the overall downtrend resumes. The 10Yr can move up to -0.40% and the 30Yr can test 0.05% on the upside before we see a reversal again.
The 10Yr GoI (6.0348%) has dipped further and is heading towards the 6%-5.95% support zone in line with our expectation. As we have been mentioning, the 6%-5.95% support zone is likely to limit the downside and the 10Yr GoI can reverse higher again from this support zone to target 6.15%-6.20% on the upside.
