STOCKS
Equities have risen sharply on early trades today following Joe Biden’s victory in the US Presidential election. The broader picture continues to remain bullish for the equities and the current rally can remain intact. Dow can move up to test 29000 and need to see if it can breach this crucial level or not. DAX can rise to 12800 and 13200 while above 12400. Nikkei has risen past 24500 and can now test 25500. Shanghai is moving up towards the upper end of its 3180-3450 range in line with our expectation. Sensex and Nifty have risen further on and keeps the bullish view intact. A further rise is possible this week.
Dow (28323.40, −66.78, -0.24%) remained below and is stuck in between 28000 and 28500 over the last two trading days. The near-term bullish view is intact to test 28750-29000 on the upside. However, we reiterate that it will be important to see if the Dow can breach 29000 from here or not. Inability to break above 29000 can keep the Dow in the broad range of 26000-29000 for some more time.
DAX (12480.02, −88.07, -0.70%) sustains above 12400 but will need to gather momentum in order to move further up towards 12900 and 13200 levels in the coming weeks. A strong fall below 12400, though less likely can negate the chances of the above mentioned rise.
Nikkei (24799.22, +473.99, +1.95%) has risen past the crucial resistance level of 24500. The outlook is bullish and Nikkei can now test 25500 on the upside from where a corrective dip to 24500-24000 is possible. From a bigger picture, while above 24000 Nikkei can target 27500-28000 on the upside over the medium-term.
Shanghai (3365.08, +52.92, +1.60%) has moved up further and can head towards 3400-3450, the upper end of its 3180-3450 range in line with our expectation.
Sensex (41893.06, +552.90, +1.34%) has surged further to test 42000 as expected. As mentioned on Friday the outlook is bullish while above 41000 and a strong rise past 42000 will pave way for a further rise to 43000-44000 going forward.
Nifty (12263.55, +143.25, +1.18%) has risen past 12200 thereby reducing the chances of an intermediate dip to 12000 that we had mentioned last week. The bullish outlook is intact and Nifty can extend the rally towards 12500 and 12750 in the coming days in line with our expectation.
COMMODITIES
Commodities trade higher today but have important resistances above current levels which could be tested and rejected from in the near term. Watch crucial levels of 26 on Silver, 1860-1880 on Gold, 42 on Brent, 40-41 on WTI and 3.25 on Copper. Immediate view is bullish to test the above mentioned resistances before a collective dip is possible in the medium term.
Brent (40.51) and Nymex WTI (38.20) both trade slightly higher. Immediate resistances on the daily charts show that Brent could again fall towards 37.50-37.5 if it declines from resistance near 42 just now. WTI on the other hand has similar trend resistance on the daily charts near 40-41 which if holds could drag the WTI price lower towards 35.0-32.50 on the downside.
Gold (1956.10) has moved up well and could be headed towards 1860-1880-2000 in the near term before a dip is seen from there in the medium term.
Silver (25.88) has been moving up in line with our expectation of a test of 26. We would keep a close watch to see if the price manages to break above 26 just now as that could take it higher towards 27 before a decline is seen again. For now Silver looks bullish towards 26 initially and then towards 27.
Copper (3.1780) has shot up sharply in line with our expectation of a rise towards resistance at 3.25. We may expect a test of 3.25 on the upside in the next few sessions followed by a sharp dip back to 3.05. Immediate view is bullish.
FOREX
Most currencies are strong against a weaker Dollar. Aussie, Pound, Yen and Rupee could remain strong for the near term with possible targets of 0.74, 1.34, 102 and 73.85 respectively on the cards. EURJPY may remain stable or attempt a rise above 123. Euro has immediate resistance at 1.19 which needs to break to keep the upside intact and take it higher towards 1.20. Watch price action near 1.19 on Euro and near 92 on Dollar Index.
Dollar Index (92.18) has dipped further and has scope to fall towards 92.00-91.75 in the near term. Weakness in Dollar could boost strength in EM and major currencies globally.
Euro (1.1889) has risen well on Dollar weakness and if it manages to break above 1.19, we may see a straight rise to 1.20 before a dip is seen from there. View is bullish for the near term while Dollar Index heads towards 91.75.
EURJPY (122.91) is heading higher towards immediate resistance at 123.66 from where a rejection could be possible after a few sessions.
Dollar-Yen (103.38) has paused near 103 and needs to break lower in order to test 102 on the downside. Else we may expect a bounce from 103 itself in the near term with some possibility of seeing a ranged movement before the expected bounce is seen.
Aussie (0.7284) has stalled just below 0.73 and needs to break above 0.73 to keep further upside momentum intact. Failure to break above 0.73 could drag it down towards 0.72 again. While Dollar trades weak and Copper heads higher, Aussie could be bullish.
Pound (1.3180) is also up along with other currencies. A rise to 1.3284 is possible in the near term which if breaks could take it further up to 1.34 before a decline sets in.
USDCNY (6.5915) has broken below 6.60 and looks strongly under the bear influence while Dollar trades weak. We may expect a dip towards 6.58/55 soon while the momentum continues to remain strong.
USDINR (74.2050) tested 73.87 last week before closing higher above 74 on Friday. In absence of RBI, the globally strong currencies against the US Dollar is positive for Rupee and could take it higher towards 73.85 again. View is positive for the Rupee boosted by a strong Euro and Yuan.
INTEREST RATES
The US Treasury yields have risen back sharply on Friday following the strong jobs data release on Friday. This has brought back the chances of testing the key resistances again before witnessing a fresh fall. The German yields have also inched high and need to see if they can break above their immediate resistances to see a corrective rise within their broader downtrend. The 10Yr GoI has risen back above 5.85% and can test 5.90% again and then can fall-back to keep the overall bearish view intact.
The US 2Yr (0.15%), 5Yr (0.36%), 10Yr (0.82%) and 30Yr (1.61%) Treasury yields have risen back sharply on Friday. This has reduced the danger of seeing a break and fall below 0.70% (10Yr) and 1.50% (30Yr) that we had been cautioning last week. In turn the yields can move back up to retest their key resistances at 0.90% (10Yr) and 1.72%-1.75% (30Yr) in the near-term and then reverse lower again.
The German 2Yr (-0.79%), 5Yr (-0.80%), 10Yr (-0.62%) and the 30Yr (-0.21%) have bounced back on Friday. It needs to be seen if the yields can rise past -0.60% (10Yr) and -0.20% (30Yr) to see a corrective rise to -0.50% (10Yr) and -0.10% (30Yr) before resuming the broader downtrend towards -0.70% (10Yr) and -0.40% (30Yr) eventually.
The 10Yr GoI (5.8729%)has bounced-back above 5.85%. While above 5.85%, a retest of 5.90% is likely in the near-term before a fresh fall is seen again. The broader view remains bearish however to see a test of 5.80%-5.78% going forward.
