STOCKS
The Dow has seen some recovery yesterday but will need to rise past 28500 in order to negate the danger of the fall to 27000. Similarly, Sensex and Nifty will have to break above 39000 and 11400 to bring back the bullishness and avoid a fall. DAX is attempting to break the range on the upside and keeps alive the chances of testing 13800 before a sharp correction sets in. Nikkei can remain stuck in a narrow range. Shanghai can fall to test the lower end of its broad 2180-3470 range.
Dow (27940.47, +439.58, +1.60%) has bounced-back well yesterday. However, a strong rise past 28500 is needed now to bring back the bullishness to see 29000-29500 levels. While below 28500 the chances are high for the Dow to revisit 27500 levels and also test 27000 on the downside. As mentioned yesterday, a strong break below 27000 will give a confirmation of a top in place and will drag the index further lower to 26000-25500.
DAX (13237.21, +268.88, +2.07%) has closed just above 13200 – the upper end of the 12800-13200 range. The danger of seeing a break below 12800 mentioned yesterday stands reduced now. As such while this break above 13200 sustains, our earlier view of seeing 13800 will remain intact and then a sharp corrective fall can happen.
Nikkei (23140.20, +107.66, +0.47%) has bounced-back into the 23000-23500 range. While above 23000, the range of 23000-23500 will remain in place and the fall to 22500 that we had mentioned yesterday may not happen. A fall below 23000 again will open up the chances of seeing 22500. The chances of seeing 24000 first before a sharp correction is still alive. We will have to wait and watch.
Shanghai (3267.06, +12.44, +0.38%) is managing to hold above 3250. However, the broader picture remains weak. We retain the view of seeing a fall to 3200-3180 (the lower end of the broad 3180-3470 range) now. The price action in the 3200-3180 region will need a close watch to see if Shanghai can bounce-back and retain the sideways range or not.
Nifty (11278, -39.35, -0.35%) broke below 11250 as expected but has bounced-back from the low of 11185.15. The index has to sustain this bounce and also break above 11400 from here in order to bring back the bullishness to see 11600 levels again. While below 11400, we remain bearish on the Nifty in the near-term to see a break below 11200 and a fall to 11000. We will have to wait and see.
Sensex (38193.92, −171.43, -0.45%) will have to break above 39000 from here to negate the danger of seeing 37000 on the downside that we had mentioned yesterday.
COMMODITIES
Commodities have risen slightly from levels seen yesterday. While Gold, Silver and Copper look fairly bullish for the coming week, we need confirmation on Crude prices to rise further from here. Failure to see an immediate bounce back from current levels in Crude could lead to a fall towards lower support of 37.50 (Brent ) and 33-34 (WTI) soon. Gold and Silver could be headed towards 1980-2000 and 28-30 soon while Copper needs to sustain above 3.05/10 to move up towards 3.15/20 by the next 1-2 weeks.
Brent (40.61) and Nymex WTI (37.80) have risen slightly from levels seen yesterday. Brent bounced back from 39.37 yesterday, respecting our support of 39.32 yesterday while WTI broke below our mentioned 36.43 to test 36.27 before bouncing back to current levels. We continue to look at 39.32 and 36.43 respectively as important levels to hold for the near term but a further bounce from here is needed to indicate resumption of uptrend. Else we may have to allow for a fall to 37.50 on Brent and 33-34 on WTI.
Gold (1954) has risen from levels near 1936 seen yesterday and while the prices rise in line with our expectation, we may soon see a test of 1980-2000 by next week.
Silver (27.22) has moved up too and could be headed towards 28-30 in the coming week. View remains bullish while above 26.
Copper (3.0375) is also trading higher along with the rise seen in other commodities. As mentioned yesterday, crucial support is seen near 2.95 above which view is bullish for Copper. A rise towards 3.15/20 looks possible within the next 1-2 weeks.
FOREX
Dollar Index has fallen from 93.66 itself bringing about a corrective strength in currencies. As volatility remains high, we may see some more fluctuations ahead of the ECB today. Dollar-Yen and Aussie remains stable and are likely to remain within the sideways range for some more time while Euro, Pound and Yuan have strengthened against the Dollar as compared to levels seen yesterday. We may expect USDINR also to dip from current levels today while 73.70 holds as a decent resistance for now.
Dollar Index (93.16) declined from 93.66 itself without testing 94 on the upside. If the fall sustains, we may expect a dip to 92.70 soon before another bounce is seen. For now, the index looks bearish.
Euro (1.1823) tested 1.1752 before bouncing back sharply from there ahead of the ECB today. While above 1.1750, view remains bullish for a test of 1.19-1.20 again on the upside.
EURJPY (125.42) has bounced well and could test 126 which is the immediate resistance above current levels. Unless a break above 126 is seen and sustained, we may be cautious of seeing another decline from here.
Dollar-Yen (106.15) is fining difficulty to rise above 106.50 and could remain stuck in the 106.50-105.75 for the next 2-3 sessions. Broader range of 107-105 remains intact for the coming week and unless a decisive break on either side is seen, further direction from here remains unclear.
Aussie (0.7270) is stuck in a sideways range unable to decide which way to go. While above support at 0.70, we may expect a rise towards 0.74 again. But at the same time keep an eye on Copper prices (refer to commodities section above) as a rise in Copper could boost a rise in Aussie.
Pound (1.2993) tested 1.2885 yesterday before bouncing back from there. View remains bearish for a test of 1.2820 while below 1.30.
6.82320-6.8525 could be the range for USDCNY (6.8375) in the next few sessions within which a fall is expected.
USDINR (73.5350) tested the initial resistance at 73.70 yesterday and came down to close at 73.53. A further dip below needs to be seen and sustained in order to negate a rise to 73.90 and instead fall towards 73 keeping the broader view of 72.50 in place. While above 73.40, we keep intact higher chances of testing 73.90 before the expected fall takes place.
INTEREST RATES
Recovery in equities has aided a bounce-back in the US Treasuries. The Treasury yields will have to sustain this bounce and also rise past their near-term resistances in order to move up further. We will have to wait and watch. The German yields are reversing higher from just above their near-term supports and can move up while they sustain this bounce. The European Central Bank meeting is due today which can trigger some sharp move in the yields. The 10Yr GoI can dip in the near-term and can trade in a sideways range within its overall downtrend.
The US 2Yr (0.14%), 5Yr (0.28%), 10Yr (0.69%) and the 30Yr (1.45%) Treasury yields have bounced-back across tenors. However, the 10Yr will have to rise past 0.70% decisively to move up further towards 0.80%. The 30Yr on the other hand has to breach 1.50% in order to gain bullishness and test 1.60%-1.65% on the upside. We will have to wait and watch if this bounce can sustain or not.
The German 2Yr (-0.70%), 5Yr (-0.68%), 10Yr (-0.46%) and the 30Yr (-0.02%) yields are reversing higher from near their key supports. -0.52% on the 10Yr and -0.11% on the 30Yr were supports that was mentioned yesterday. A further rise from here will ease the downside pressure and can take the yields higher to -0.40% (10Yr) and 0.05% (30Yr) in the near-term.
The resistance at 6% on the 10Yr GoI (5.9484%) is holding well and the yield has dipped below 5.95% yesterday. A While below 5.95% a test of 5.90% and a range of 5.90%-6% is possible for a few days. As long as the yield remains above 5.90%, we see high chances of a rise to 6% and 6.10% in the coming days before the broader downtrend resumes.
