STOCKS
Strong sell-off in equities and the major indices are coming closer to their crucial support which will have to hold in order to avoid a much deeper fall. Dow has to hold above 33000 else a further fall to 32000 is possible. DAX has important support at 15400 a break below which can drag it to 15200-15000. Nikkei has declined below 28000 and is under pressure to fall further towards 27000 and even lower if it fails to bounce above 28000 immediately. Shanghai is managing to hold above 3500 and can remain stable if it continues to sustain above 3500. Sensex and Nifty had recovered sharply from their lows on Friday but can fall-back today to 51000 and 15400 in the coming days.
Dow (33290.08, −533.37, -1.58%) has moved down into the 33500- 33000 support zone. 33000 is a crucial level. A break below it can trigger a deeper fall to 32000. We will have to wait and see if the Dow can manage to bounce-back this week or not.
DAX (15448.04, −279.63, -1.78%) has tumbled below 15600 and is poised just above the next crucial level of 15400. A break below 15400 can drag DAX further lower to 15200-15000 this week.
Nikkei (27981.25, −982.83, -3.39%) has declined sharply and is trading below the crucial support level of 28000. Inability to bounce above 28000 can drag the index lower to 27000 and even 26000 in the coming days. The rise to 32000 that we were mentioning last week will get delayed now.
Shanghai (3529.83, +4.74, +0.13%) is continuing to hold above 3500. View remains the same. While above 3500, a rise to 3550-3560 and even 36000 is possible in the near-term. In case of a break below 3500, Shanghai can fall to 3450-3425 and then resume the overall uptrend.
Sensex (52344.45, +21.12, +0.04%) and Nifty (15683.35, −8.05, -0.05%) had recovered sharply from their day’s low on Friday but may fall again today. Sensex can break 52000 and fall to 51000. Nifty can test 15400-15300 on the downside. Thereafter we expect both the indices to reverse higher.
COMMODITIES
Most commodities trade lower with an attempt to slightly recover from the lows seen last week. Crude prices have been most efficient to rise back sharply and could possibly test $75-77 (Brent) and $73-75 (WTI) soon. Immediate view is bullish on Crude. Gold has risen a bit while Silver trades lower. While above 1760, Gold could slowly move up but Silver needs to rise above 26 and sustain to move higher towards 27 again in the medium term else a range of 25-27 could come into play for the medium term. Copper can fall to 4.00 before bouncing back from there. Immediate view is bearish.
Brent (74.10) and WTI (71.93) have managed to move up again and could be soon headed towards $75-77 and $73-75 respectively. Immediate view can be possibly bullish for Crude.
Gold (1775.20) has risen slightly from 1764, holding above support at 1760 for now. If the price manages to remain above 1760, it may eventually rise towards 1800-1820 in the sessions to come. A dip in Dollar Index from current levels could boost a rise in gold prices in the near term.
Silver (25.98) continues to trade lower. A further fall below current levels can accelerate a fall towards support at 25. But the price may remain stable near current levels and eventually move up towards 26.50 in the near term. Broad range of 25-27 may hold for now.
Copper (4.1415) continues to fall sharply and can head towards 4.00 before bouncing back from there in the longer run.
FOREX
Dollar Index trades higher although a slight corrective dip is seen. Euro trades below 1.19 and could soon rise back to test 1.19-1.1950 while lower level of 1.1850 seems to be holding well. EURJPY, Aussie and Pound trade lower too but may attempt a short corrective rally in the near term. USDCNY has risen above 6.45 and needs to sustain in order to move up further towards 6.46/48. A corrective dip from 6.46 looks possible. USDINR has scope to test 73.60/40 before bouncing back from there towards 73.80-74 again in the medium term. Watch price action near 73.60/40.
Dollar Index (92.233) rose to test 92.405 last week but has dipped from there. We will have to see if 92.50 holds in the medium term and produces a sharp fall towards 92.0-91.50 in the coming sessions or not. Thereafter a break or bounce from 91.50 would be crucial.
Euro (1.1870) has bounced a bit from low of 1.1847 and while 1.1847 holds, we may expect a corrective rise towards 1.1900—1.1925 in the near term. On the downside there is crucial support at 1.18.
EURJPY (130.59) has fallen sharply and can test 130 before attempting to bounce higher again towards 131.50 in the near to medium term. While above 130, we can keep alive some bullish possibilities; else a break eblow 130 would make it vulnerable to deeper fall towards 129.50-129.15 before a bounce is seen in the longer run. Watch price action near 130 now.
Dollar-Yen (110.20) dipped sharply from 110.82 yesterday. This is surprising as it has not moved up in line with Dollar Index and shows some divergence just now. Watch price action near immediate resistance zone of 110.85-111 which if holds and produces a sharp rejection could be boosted by a fall in Dollar index from 92. If the Dollar Index manages to rise past 92, it could pull up Dollar Yen too towards 111+ levels.
Aussie (0.7517) has bounced sharply from the previous low of 0.7476 and could head towards 0.7550-0.76 in the near term if the bounce sustains in the medium term.
Pound (1.3816) has bounced from 1.3791 and the bounce could take it upto 1.3855 at least in the next couple of sessions. Thereafter whether it chooses to move up further towards 1.3950 or falls back to head towards 1.3750/3700 will have to be seen. Note that 1.37 would be deeper support below 1.38.
USDCNY (6.4521) has risen and trades above 6.45 just now. The rise needs to sustain and take the pair higher slowly towards 1.46/48 in the longer run. Watch price action near 1.46 from where a possible rejection can be seen in the near term.
USDINR (73.8650) saw a pullback on Friday, closing below 74. We may expect a possible extension to 73.60/40 in the near term before again bouncing back towards 73.80-74.00 in the longer run. Successive break below 73.40 would be needed to turn bearish for the medium term.
INTEREST RATES
The US Treasury yields have declined sharply at the far-end and are rising at the near-end. The far-end (10Yr, 30Yr) yields have crucial supports coming up that can be tested this week. The yields will have to bounce from there to avoid a further deeper fall. The German yields hover above their key supports and we keep intact our view of seeing a fresh rise from here in the coming days to keep the overall uptrend intact. The 10Yr GoI has come-off sharply from its high last week and can extend the fall if it breaks below 6%. Else a sideways consolidation is possible.
The US 2Yr (0.26%), 5Yr (0.86%) Treasury yields continue to trade higher while the 10Yr (1.41%) and 30Yr (1.99%) have tumbled further. 1.35% on the 10Yr and 1.9% on the 30Yr are very crucial levels to watch this week from where the yields will have to move up in order to avoid a much deeper fall. The price action at these levels will need a close watch.
The German 2Yr (-0.67%), 5Yr (-0.59%) and 10Yr (-0.20%) yields remain stable. The 30Yr (0.25%) has dipped further and is poised at a crucial support. We expect it to bounce from here to keep the overall uptrend intact and rise to 0.55% over the medium-term. The 10Yr has support at -0.30% which can limit the downside from here and keep intact the view of seeing 0% on the upside.
The 10Yr GoI (6.0090%) has come-off last week after testing 6.06%. The broader view remains bearish to see 5.95%-5.9% on the downside. A break below 6% can trigger this fall. While above 6% the 10Yr GoI can consolidate in the range of 6%-6.06% with possibilities of seeing 6.08%-6.1% on the upside before the broader downtrend resumes.
