STOCKS
The Dow and DAX are coming closer to their crucial range resistances and will need a close watch in the coming days. Nikkei though is trading stable for now looks bullish to move further higher in the near-term. Shanghai can consolidate before resuming its uptrend. Sensex and Nifty have bounced and need to be seen if they can sustain higher. Also both the Sensex and Nifty will have to breach their crucial resistance coming up in order to become bullish and completely negate the chances of seeing any further fall.
Dow (24575.90, +369.04, +1.52%) has risen back recovering the loss made on Tuesday. It will have to be seen if it manages to sustain the bounce. 24700-25000 will be a crucial resistance zone and a strong rise past 25000 is needed to become bullish for a further rise to 26000. While the 24700-25000 resistance holds, the Dow can reverse lower and will continue to trade in the 22500-25000 range.
DAX (11223.71, +148.42, +1.34%) has bounced-back again and is now poised in the 11200-11350 resistance zone. A rise to test 11350 is possible in the near-term. We will have to wait and watch if it can surpass 11350 decisively in the coming days. Such a break above 11350 can take the DAX higher to 11500 initially. A further break above 11500 will then confirm the bullishness.
Nikkei (20583.95, −11.20, 0.054%) sustains above 20500 but seems to lack strength to move further higher. 20800 is the immediate resistance which can be tested while the index remains above 20500. The broader view continues to remain bullish to see further rise towards 21000-21500 eventually in the coming days as long as the Nikkei trades above 20000.
As expected, Shanghai (2887.31, +3.57, +0.12%) remains stuck in between 2875 and 2900. This narrow sideways consolidation can continue for a few more days. As mentioned yesterday, a breakout on either side of 2875-2900 will then determine whether the Shanghai will go up to 2925-2950 from here itself or will see one more leg of corrective fall to 2850-2825 first before resuming the overall uptrend.
Nifty (9066.55, +187.45, +2.11%) has risen back and closed above 9000 yesterday thereby reducing the danger of seeing a break below 8800 that we had mentioned yesterday. While the Nifty holds above 9000, a test of 9200-9250 is possible in the near-term. However, a strong rise past 9250 will be needed to gain momentum and also to wipe out completely the danger of seeing a fall below 8800. So the price action around 9200-9250 will need a close watch
Similarly, Sensex (30818.61, +622.44, +2.06%) can test 31000 and can even move up to 32000 in the near-term while it sustains above 30000. However it will have to breach 32000 decisively to become bullish for further rise and also to completely negate the danger of falling below 30000.
COMMODITIES
The Energy Information Administration (EIA) reported a fall in US inventory stocks by 5mln barrels for week ended 15th May leading to a rise in crude prices. This was against the analyst expectations of seeing a 1.15mln barrels build as mentioned yesterday. Gold and Silver have dipped a bit but could be in a corrective fall just now only to rebound later. Copper has moved up further indicating a possible bullish movement coming up in the near to medium term whiile above 2.40.
Brent (35.99) and Nymex WTI (33.64) have risen sharply contrary to our expectation of seeing a dip initially from $35 and $33 levels respectively. While the rise above the mentioned level sustains, we may expect a rise towards $37.50 for Brent and $35 for WTI in the near term. We do not negate a possible dip in the near term, but could be seen from slightly higher levels.
Gold (1745.30) and Silver (17.82) have dipped after a sharp rise seen yesterday. Initial levels to watch on Gold would be 1740 and lower at 1720 which are crucial to break to turn bearish for the near term. While above 1720, Gold could remain stuck in a range of 1720-1760. Silver on the other hand has dipped a bit but we may not negate a possible rise to 19 after the current corrective dip is over. The current fall is likely to be limited to 17.50/30.
Copper (2.46) has risen sharply setting a bullish tone for the near to medium term. A gradual rise to 2.50/55 could be on the cards for the coming sessions while 2.40 on the downside continues to remain as immediate support.
FOREX
Dollar Index is stable while Euro could rise to test immediate resistances. EURJPY is bullish for the near term but could fall if Euro fails to move up from here. Aussie is ranged while Pound could see slight fall before rebounding from there. Yuan and Rupee looks stable near current levels.
Dollar Index (99.35) has important support near 99 which if holds could take the index higher back to 100.0-100.5 in the near term. While above 99, near term looks bullish.
Euro (1.0962) could test resistance near 1.10-1.1015 which if hold could push Euro back towards 1.09 in the near term.
Dollar-Yen (107.64) is stable for now but has scope for re-testing 108 or higher in the near term. 107.40-108.20 could be the range for the near term.
EURJPY (118.03) has risen along with Euro. We keep our upside target of testing 119 for the near term intact. Near term looks bullish. Only if Euro falls from current levels, we may expect a dip in EURJPY before a test of 119.
Aussie (0.6561) has moved up a bit. AS mentioned yesterday, we may look for trade within 0.65-0.66 region for the near term.
Pound (1.2198) fell again to levels below 1.22. Support is seen at 1.21 and lower near 1.2070 but we may not look for a test of these supports and expect a bounce from current levels or slightly lower. Immediate view looks bearish but medium term could see a rise towards 1.24.
USDCNY (7.1035) continues to trade above 7.10 and could be bullish towards 7.1250 for the near term unless a sustained break below 7.10 is seen. View is stable for the near term.
USDINR (75.80) may trade in the 75.50-76.00 region for the near term. The broad 50p range is likely to hold for 2-3 sessions.
INTEREST RATES
The US Treasury yields have reverse lower as the resistances mentioned yesterday are holding well. The chances of a rise that we had expected stands reduced now and the yields can dip to test their supports now. The auction for the new 20Yr has met the demand for a yield of 1.22% according to news releases. The German yields remain higher and remains supported from the news of France-Germany proposing to raise a common relief fund. The German yields have room to move up in the near-term before reversing lower again. The 10Yr GoI can dip to test its 6%-5.95% support zone and then can reverse higher again.
The US 2Yr (0.16%), 5Yr (0.32%), 10Yr (0.66%) and 30Yr (1.38%) have dipped slightly further across tenors. The resistance at 1.43% on the 30Yr is holding well and a dip to 1.30% looks likely in the near-term. However, a strong break below 1.30% will be needed to turn the outlook bearish. While 1.30% holds, a bounce to 1.40%-1.43% is possible again and it will keep alive the possibilities of the 30Yr breaking above the 1.43%-1.45% resistance zone. The 10Yr on the other hand has turned down from 0.70% itself and can dip to 0.60%-0.58%. It can continue to consolidate in the 0.58%-0.70%/0.75% range.
The German 2Yr (-0.69%), 5Yr (-0.67%), 10Yr (-0.47%) and 30Yr (-0.06%) yields remain higher but stable. Our view remains the same. There is room on the upside for the yields to move up further in the near-term. The 10Yr test -0.40% and the 30Yr can inch higher to 0.05%. Thereafter the yields can fall-back resuming their overall downtrend.
The 10Yr GoI (6.0413%) remains lower and keeps intact our view of testing the 6%-5.95% support zone before reversing higher again. However, as mentioned in the Evening Comments yesterday, the pace of the down move is slowing down and there are high chances that the yield could reverse higher from 6% itself.
