STOCKS
Dow is inching down towards 34000 as expected. The outcome of the Fed meeting tonight will decide whether the Dow can reverse higher from 34000 itself or after further fall. DAX sustains higher and keeps the bullish view intact of seeing 16000-16100. Nikkei holds higher and can move to test 30000 as expected. Shanghai has broken below 3550 and can now see a corrective fall to 3500 or lower before resuming its uptrend. Sensex and Nifty continue to move up and are outperforming others in line with our expectation. The outlook is bullish and the indices have room to move up further.
Dow (34299.33, −94.42, -0.27%) is inching down towards 34000 as expected. It will have to be seen if the fall extends beyond 34000 towards 33500 or will the Dow bounces from 34000 itself. As we have been mentioning for some time, 34000 and 33500 are important support that are likely to hold and keep the broader bullish view intact of seeing 36000 on the upside over the medium-term.
DAX (15729.52, +55.88, +0.36%) sustains higher and keeps intact the bullish view of seeing 16000-16100 on the upside. A break above 15800 can accelerate the rally. Supports are at 15600 and 15400. As mentioned yesterday, a strong fall below 15400 is needed to turn the view negative.
Nikkei (29346.37, −94.93, -0.32%) has come-off from the high of 29480.85. The view remains bullish to break 29500 and see a rise to 30000. Supports are at 29000 and 28500. As mentioned yesterday, the long-term charts are giving bullish signals to see 32000-32500 and even higher levels over the medium-term.
Shanghai (3540.50, −16.06, -0.45%) has declined below 3550 and can now fall to 3500. A break below 3500 can see an extended fall to 3450 even. However, the broader trend is up and we expect the index to resume the uptrend from 3500 or lower.
Sensex (52773.05, +221.52, +0.42%) and Nifty (15869.25, +57.40, +0.36%) continue to move up and are keeping our bullish view intact. Sensex is heading up towards 53000-54000 as expected. Nifty on the other hand can test 16000-16200 initially and then 16500 eventually over the medium-term. Supports are at 52000 (Sensex) and 15600 (Nifty).
COMMODITIES
Crude prices look strongly bullish for the near term. Gold has fallen sharply breaking below immediate support at 1860 and could head towards 1840/20 before seeing a bounce from there while silver continues to trade higher and while above 27, it can remain within sideways range of 27-28.50. Copper has fallen sharply after the long positions got cut as China May curb further price rise. Prices of the metal used in the power and construction industries have dropped more than 8 per cent since touching a record high at $10,747.50 on May 10. Copper could be weak in the near to medium term while below 4.45/40.
Brent (74.56) and Nymex WTI (72.65) have both moved up sharply and look strongly bullish for the near term. Brent can test $75-77 while WTI is headed towards $73-75 in the near term.
Gold (1856.30) has broken below immediate support at 1860 that we had warned in yesterday’s edition. This is crucial and if the price sustains below 1860, it would indicate a further fall to 1840-20 in the near term negating any near term rise towards 1900 or higher. Note that 1840-1820-1800 are important levels from where a bounce could be possible in the medium term. Further upside is delayed or negated while below 1860.
Silver (27.77) has moved up a bit unlike the fall seen in Gold. Although gold can fall further while below 1860, silver May continue to trade sideways within 27-28.50 for now. Only a break below 27 will force us to look for lower targets.
Copper (4.3520) has fallen sharply breaking below immediate trend support near 4.45/40 and while the price trades lower, it is vulnerable to a fall to 4.20-4.00 in the near term. View is bearish while below 4.40/45.
FOREX
Dollar index has inched up a bit and if it breaks above 90.60, it can target 91-91.50 in the near term. Euro is trading above 1.21 just now and can become bearish on a break below 1.21 in the near term. Aussie and Pound look bearish. USDCNY and USDINR May rise towards 6.41/42 and 73.50 respectively. EURJPY can remain within 134-132 for the near term. Watch price action in currency markets after the FOMC statement tonight.
Dollar Index (90.56) has moved up slightly and it would be important to see if it breaks above 90.60 as that could trigger a rise to 91-91.50 in the medium term indicating some bearishness for other currencies globally. Immediate support is seen near 90.30.
Euro (1.2117) is holding above 1.21 just now but a break above 90.60 on dollar index will drag down Euro below 1.21 taking it towards 1.2050/25 or even lower in the medium term. Watch price action near 1.21 after the FOMC press release tonight.
EURJPY (133.44) May test 134 before falling off from there. A break above 134 is needed for the cross to move higher towards 135. Watch price action near 134 just now. An immediate range of 134-132 looks likely for the near term.
Dollar Yen (110.09) fell from 110.17 but if the dollar index moves up, dollar yen also would be pulled up towards 110.30/50 in the near term. Watch price action while above 110.
Pound (1.4079) has fallen from levels seen yesterday. A test of 1.40 or even 1.3930 is possible in the near term before any bounce is seen. While the Dollar index is inching upwards, pound may remain weak.
Aussie (0.7695) has fallen below 0.77 and looks bearish for a fall to 0.7644 or even 0.76 in the near term. Immediate view is bearish.
USDCNY ( 6.4032) needs to sustain above 6.40 in order to rise towards 6.41/42 in the near term. Else a dip back towards 6.38 can come into the picture. Watch price action near 6.40 for now.
USDINR (73.3175) closed just above. 73.30 yesterday and while the rise continues we may see a rise to 73.50 that we have been mentioning since the last few days. The pair is bullish while above 73.30.
INTEREST RATES
The US Treasury yields are managing to hold higher ahead of the US Federal Reserve meeting outcome tonight. A strong rise from here after the Fed meeting would reduce the danger of the yields breaking below their crucial supports and will keep the overall uptrend intact. We will have to wait and watch. The German yields are holding above their key supports and are signaling the resumption of their broader uptrend. The 10Yr GoI has risen sharply and can rise further if it can sustain higher contrary to our expectation to see a reversal from 6.04% itself.
The US 2Yr (0.17%), 5Yr (0.78%), 10Yr (1.50%) and 30Yr (2.19%) Treasury yields are holding higher. A strong rise above 1.58% (10Yr) and 2.25% (30Yr) from here after the Fed meeting will reduce the danger of breaking below the crucial supports at 1.4% (10Yr) and 2.1% (30Yr). That in turn will keep the overall uptrend intact and revisit of 1.7%-1.8% (10Yr) and 2.3%-2.4% (30Yr) is possible above. We will have to wait and watch.
The German 2Yr (-0.68%), 5Yr (-0.61%), 10Yr (-0.23%) and the 30Yr (0.32%) yields have moved up further. The supports at -0.30% (10Yr) and 0.25% (30Yr) are holding well in line with our expectation and are keeping the overall uptrend intact. We expect the yields to see a fresh rise towards 0% (10Yr) and 0.55% (30Yr) in the coming weeks.
The 10Yr GoI (6.0404%) has risen sharply and has closed just above 6.04%. While above 6.04% a further rise to 6.08%-6.10% is possible contrary to our expectation to see a reversal to 6% from here itself. That will also delay the fall to 5.95%-5.9% that we have been mentioning for some time.
