STOCKS
Dow (21796.55, +0.39%) is firmly bullish and could continue to move up in the near term. Looking at the current momentum, the index could rally towards 22000 sooner than expected. Near term uptrend remains intact.
Dax (12212.04, -0.76%) came off from levels near 12340 instead of rising towards 12400. Note that immediate support is visible near 12050 on the weekly charts and while that holds, there is some hope of a bounce back towards 12500-12750 in the medium term. Only on a break below 12000, if seen, would we look for any further downside.
Shanghai (3252.66, +0.09%) recovered the fall to 3220 yesterday itself, closing at levels above 3240. There could be some sideways consolidation within 3220-3270 for a few sessions before it rises further towards 3280 or higher.
Nikkei (19995.37, -0.42%) is almost stable and is likely to consolidate within 19700-20280 in the medium term. Only on a break on either side of the range would we get some more clarity on further direction.
Nifty (10020.55, -0.00%) made an intra-day high of 10115 before loosing all gains to close at previous levels. 10100-10115 is an interim resistance which if holds could produce a fall towards 9900 before again rising up towards current levels. Else the rally may continue towards 10200 in the near term. A corrective fall from current levels is more preferred just now.
COMMODITIES
Gold (1260) is trading within the range of 1245-70. It has a crucial Support at 1245. If that holds, we can see a rise towards 1270. As Gold is overbought in near term time frame, we are not confident about the sustainability beyond 1270 regions. But, in case the Support at 1245 breaks, there will be a further dip to 1230 and 1210. Silver (16.55) is also within the range of 16.50-16.17.Only a close below 16.50 could open up 16.20 and 15.90 respectively.
Copper (2.86) looks on a firm footing while it is trading above 2.78 levels. Midterm resistance comes at 3.12 regions from where we may see some correction due to profit taking.
Oil Price rose higher in line with our expectation. Both Brent (51.45) and WTI (48.99) are trading within the ranges of 48-52 and 47.60-49.50 respectively. We are bullish on oil since 10th of July onwards and there are no reason to change our bullish stance in near term while Brent and WTI are trading above 48 and 46 levels on a weekly closing basis. A weekly close above those resistance levels might confirm the end of the midterm bearish trend also.
Gold-WTI ratio (25.92) is hovering around its crucial support at 25.90. If this support breaks then it may come down towards 24 levels. Brent-WTI ratio (2.16) may find support at current levels, could rebound towards 3.00 within a couple of week time.
FOREX
Better than expected US durable goods orders data has helped Dollar Index (93.87) to stage a sharp intraday recovery after hitting a low of 93.15 following the Fed concern over inflation. Hence our target of 93.00 was missed by a very narrow margin but the chances of a retest of 93.00 or even a further decline to 92.00 remain open at this point.
Similarly, the initial target of 1.1800 was almost met as Euro (1.1686) registered a high at 1.1777 before retreating below 1.1700. The trend remains firmly up and the higher target of 1.20 remains open but the troubling issue remains the highly overstretched state of both Euro and Dollar.
Euro is in the most overbought condition since 2008 and Dollar in the most oversold condition since 2011, which warrants a consolidation phase at least if not an outright sharp correction. So follow the trend without underestimating the possibility of a sharp reversal in the next few sessions.
Dollar-Yen (111.05) is trading closer to the lower end of the 6-day range of 110.50-112.15. if the support of 110.50-30 holds, it may bounce back to 112.00-50 levels once again.
Pound (1.3083) retreated along with other majors after hitting a high at 1.3159, not far from the major resistance of 1.32. Failure to rise above 1.32 and a break of 1.30 may invite weakness in the near term.
Aussie (0.7967) is seeing a minor correction in sync with the other majors against Dollar but the trend remains firmly up and the targets of 0.8100-70 unchanged. Only a break below 0.7925 may signal a consolidation phase in the range of 0.7870-0.8050 for a few days to be followed by a fresh rise.
We will watch today’s price action in Dollar Rupee (64.11) closely. A Close below 64.25, and certainly below 64.09, will accelerate the downtrend. A Close above 64.25 (less likely) could trigger a rise to 64.35-50.
INTEREST RATES
The US yields are rising again to re-test the long term resistances. As mentioned yesterday the yield s could remain stable in the coming sessions before we see another downleg. The 30Yr (2.91%) is targeting 3% while the 10YR (2.31%) and the 5Yr (1.85%) are targeting levels near 2.50% and 2% respectively.
The US-Japan 10Yr (2.24%) has bounced from immediate support and could now move up towards 2.31% in the near term.
The Japanese yields are trading at support levels sand could move up in the coming sessions. The 10YR (.08%) and the 5Yr (-0.06%) could target levels near 0.085% and -0.046% respectively. Near term looks bullish.
