STOCKS
Among the major indices the Dow looks relatively much weaker and vulnerable to fall from current levels. The others like the DAX, Nikkie, Shanghai, Sensex and Nifty look to be consolidating and are keeping alive the chances of seeing one more leg of rise before a corrective fall sets in. As we had mentioned last week, the equity segment continues to remain the “could go either side from here and wait and watch” mode.
Dow (27657.42, −244.56, -0.88%) remains below 28000 and is under pressure. The chances of breaking below 27500 is increasing. Such a break will open doors for 27000 and will also keep the Dow vulnerable to extend the fall towards 26000 eventually. A strong rise 28000 is now needed to ease the downside pressure for now. Also a decisive break above 28500 will be needed to completely negate the above mentioned fall.
DAX (13116.25, −91.87, -0.70%) sustains above 13000 and continues to oscillate around 13200. The bullish view of seeing 13800 will remain intact as long as the DAX trades above the supports at 13000 and 12800. We reiterate that only a break below 12800 will negate the chances of seeing a rise to 13800 and in turn will drag the DAX lower to 12400 and even 12000 thereafter.
Nikkei (23360.30) is closed today and tomorrow. It continues to remain stable within the 23000-23500 range.
Shanghai (3328.96, −9.13, -0.27%) has risen-back sharply on Friday and is trading well above 3300. While above 3300, the chances of seeing a further rise to 3400-3450 is high. Overall the 3180-3450/70 range is intact and the index can move up towards the upper end of this range now.
The support at 11450 mentioned in the Friday’s Morning Briefing has held very well. Nifty (11504.95, -11.15, -0.10%) could trade in the 11400-11600 range for some time. The bias continues to remain bullish to see a break above 11600 and a rise to 11800-12000 eventually.
Sensex (38845.82, −134.03, -0.34%) dipped below the support level of 38770 mentioned on Friday but has managed to bounce-back. Inability to bounce above 39000 from here can drag the Sensex lower to 38000 in the coming days. In that case the 38000-39000 range can come-back to play again.
COMMODITIES
Commodities trade higher today and look bullish for the near to medium term. Crude prices may move higher towards 47.50 (Brent) and 45 (WTI) while Gold and Silver are stuck in a narrow range and need to break on either side to see fresh volatility. On the charts, Gold and Silver look more likely to break to the upside. Copper has risen well but has immediate resistance at 3.15 which needs to break to keep the upside momentum intact. Any dip from 3.15, would be short lived.
Brent (43.22) and Nymex WTI (41.43) continue to trade higher and look positive for this week for a possible target of 47.50 and 45 respectively.
Gold (1959.40) is stuck in a narrow sideways range and could remain within the broad 1980-1930 region for the near term. A break on either side is needed to see some volatility in the price. On the charts, a break to the upside looks likely.
Silver (27.08) has dipped slightly but we may expect range trade within 27.0-28.50 over the next 1-2 sessions. A break on either side is needed to bring in fresh volatility.
Copper (3.1105) has risen well but has immediate trend resistance at 3.15 on the daily candles which need to break in order to keep the upward momentum intact. A break above 3.15, if seen could be bullish for the metal towards 3.20 or even 3.30 over the next 1month.
FOREX
Dollar Index remains stable above immediate support levels but needs to indicate fresh bearishness in order to bring in strength in other currencies. While above 92.50, we expect the index to remain stable. Euro looks bullish on the medium term charts but needs to break above 1.19 to pick up rising momentum. Aussie and Pound could rise a bit in the very near term but could test interim resistances in the next 1-2 sessions. EURJPY looks bearish for a test of 123 or even 122 in the near term. USDCNY looks ranged. USDINR looks bearish towards 73 or lower in the longer term but needs to sustain below 73.50 today. A break above 73.50 could take it to 73.70/80 again before the expected fall is seen. Watch price action near 73.50 today.
Dollar Index (92.83) trades above immediate support near 92.70/50. While that holds, we may keep the range of 92.70-93.70/50 intact. Only a break below 92.70/50 could trigger a fresh fall towards 92 or lower in the longer run.
Euro (1.1857) could test 1.19 in the near term. While charts are indicating a possible bullish movement towards 1.20, we would wait to see price action near 1.19 over the next few sessions.
EURJPY (123.69) has scope to fall towards 123 or even 122 in the medium term. For now, a test of 123 looks likely before a bounce back towards 124.40 is seen.
Dollar-Yen (104.32) has broken below 104.50 and could now have scope for a test of crucial support at 104. If the pair fails to bounce from 104, it could be vulnerable to a fall to 103-102 in the medium term. Watch price action at 104 over the next few sessions.
Aussie (0.7314) could test 0.7350 in the near term before again falling back towards 0.7250 which is an immediate support. If Comex Copper manages to break above immediate resistance at 3.15 (refer to commodities section above), Aussie could break above 0.7350 to head higher in the longer run.
Pound (1.2951) did see a rejection from 1.30 but now seems to be headed back towards the crucial resistance at 1.30. While the Dollar Index trades low, we may expect a possible break above 1.30 in the near term as the Pound may target higher levels of 1.32. Watch price action near 1.30. Immediate range for the day could be seen in the 1.20-130 region.
USDCNY (6.7596) has moved up instead of falling towards 6.74 as expected. While above 6.73/74, we may expect a test of 6.78 on the upside. A ranged movement within 6.78-6.74 looks possible for the near term.
USDINR (73.45) rose back sharply from 73.17 to close at 73.45. We continue to look at 73.50 as immediate resistance and only a sustained trade below 73.50 could take it down to 73.00-72.90 as expected. A break above 73.50 if seen today could be indicative of a re-test of 73.70/80 on the upside. We may expect USDINR to fall towards 73 and lower by end of this week.
INTEREST RATES
The US Treasury yields continue to remain within the expected sideways range. Within this range, the yield at the far-end (30Yr) seems to be moving up towards the upper end of the range. The German yields continue to trade lower and keep our near-term bearish view intact. The 10Yr GoI looks mixed. It can trade in a sideways range of 5.95%-6.05% for some time.
The US 2Yr (0.14%), 5Yr (0.28%), 10Yr (0.70%) and the 30Yr (1.46%) Treasury yields have inched higher on Friday. The 30Yr seems to be moving up towards the upper end of its 1.40%-1.60% range. We expect 1.60% to cap the upside and drag the 30Yr lower again. The 10Yr remains stable within its 0.65%-0.73% range. The near-term outlook is mixed and a breakout of this range will be needed to get a cue on whether the 10Yr will go up to 0.80% or fall to 0.50%.
The German 2Yr (-0.70%), 5Yr (-0.70%), 10Yr (-0.49%) and the 30Yr (-0.05%) remain lower and stable. The bearish view remains intact. As we had been mentioning over last week the 30Yr can fall to -0.10% and even -0.20% while it trades below 0%. The 10Yr is likely to remain in the range of -0.40%/-0.50% with a bearish bias to break below -0.40% eventually and fall to -0.50% and -0.60%.
The 10Y GOI (6.0148%) has been oscillating around 6% over the last few trading days. The near-term outlook is mixed. 5.95%-6.05% is the range that we can look for in the coming days. A breakout on either side of this range will then decide whether the 10Yr GoI will go up to 6.10% or fall to 5.90%. We will have to wait and watch.
