STOCKS
Dow has risen but has to rise past 35250 from here to strengthen the bullish case of seeing 36000 on the upside. DAX is at the upper end of its 15200-15800 range and needs to see if it is breaking the range of the upside or is going to fall-back and retain the range for some more time. Shanghai is consolidating in a narrow range and looks mixed in the near-term. Nikkei is closed today. Sensex and Nifty have declined on Friday but have strong supports that can limit the downside and keep the broader bullish view intact..
Dow (35208.51, +144.26, +0.41%) has risen and closed just below 35250. We will have to wait and see if the much awaited break above 35250 and the rise to 36000 can happen now. As mentioned on Friday, in case if 35250 continues to hold and the Dow dips below 35000 decisively, the chances of falling to 34250-34000 will come back into the picture again and the broader 33000-35250 range will continue to remain intact.
DAX (15761.45, +16.78, +0.11%) tested 15800 – the upper end of its 15200-15800 range and has come-off slightly. We retain our bullish view of seeing an upside breakout above 15800 and a rise to 16000-16200 in the coming weeks. Failure to rise past 15800 can drag the index lower and keep it inside the 15200-15800 range for some more time.
Nikkei (27820.04) is closed today.
Shanghai (3468.47, +10.25, +0.30%) oscillates between 3440 and 3480 over the last few days. A breakout on either side of this narrow range will decide whether the index can go up to 3500-3550 or fall back 3400-3350 again. From a bigger picture Shanghai will have to rise past 3550 to bring back the bullishness and also to completely negate the chances of seeing 3200 on the downside.
Sensex (54277.72, −215.12, -0.39%) fell on Friday but is likely to get support in the 53500-53000 region in case the fall continues this week. While above 53000, the broader bullish view remains intact to see 56000 on the upside.
Nifty (16238.20, −56.40, -0.35%) seems to be struggling to get a strong follow-through rise above 16300. Immediate support is at 16150 and then slightly deeper ones are at 15900 and 15800. The outlook remains bullish while above 15800 to see a strong break above 16300 and a rise to 16500-16600 in the coming days.
COMMODITIES
Massive sell off seen in Gold and silver that has dragged down crude prices as well. We need to see if they manage to sustain above respective crucial supports else would be vulnerable to further bearishness in the coming sessions. Gold is bearish while below 1750, Silver is bearish while below 24.50, Brent and WTI are bearish on a break below 69 and 66/65 respectively. Co bounce from there could keep the long term uptrend intact else it could come into a bearish zone as well. Watch price action near 4.20 in the near term.
Brent (69.30) has important support at 69 which needs to hold in order for it to bounce back to 70-73. Any break below 69 would make it bearish towards 68/67-65 levels. WTI (66.81) has support at 65 which is important. Any break below that would make it bearish towards 60.
Gold (1739.70) has seen a massive selling that has taken the price down sharply below our expected support level of 1750. Gold has tested a low of 1680 before bouncing back and while above 1700, it could has some scope to bounce back but while below 1750 overall view is biased to the downside. We would keep a close watch to see if the bounce is short lived or will it continue to fall from here in the near term.
Silver (23.95) has also fallen sharply breaking below out expected support at 24.50. Note that 23 is now an important support which is needed to hold to push back Silver towards 24+ levels in the medium term. Any break below 23, if seen and sustained would indicate a fresh fall.
Copper (4.3280) has not fallen as much as that seen in Gold and Silver. But we would be cautious to see if support at 4.20 holds and produces a bounce back to higher levels. Any break below 4.20, could make Copper vulnerable to a sharp fall in the medium term.
FOREX
Dollar Index has risen and could test 93.0-93.30 before coming off while Euro can fall to 1.17. Dollar Yen has risen well in line with a rise in the Dollar Index and could test 110.30/50 before coming back from there. Aussie can rise to 0.74-0.75 while Pound could be ranged within 1.40-1.37 in the near term. USDCNY can head towards 6.46/45 while USDINR can fall towards 74-73.80 too.
Dollar Index (92.79) has risen again to head towards 93 as support near 91.75 is holding well for now. Watch price action near 93-93.30 to see if it breaks higher to indicate bullishness or continues to remain within the range of 93.30-91.75.
Euro (1.1759) has dipped sharply and if it falls below 1.1750 and sustains, it could be vulnerable to test 1.17-1.16 soon. Watch price action near current levels.
EURJPY (129.61) can fall to test 128.70 before again rising from there. Failure to sustain above 128.70 can take it down to deeper support at 128.
Dollar-Yen (110.20) has risen to test 110.30-110.50 from where a decline is possible. Watch price action at 110.50 over the next few sessions.
Aussie (0.7354) seems to have paused above 0.7290 and while it trades above 0.7290, there is scope for a rise to 0.74-0.75 in the medium term.
Pound (1.3868) is stuck within 1.40-1.37 and needs to break on either side and sustain to give clarity on further direction from here. Immediate view is bearish for a fall to 1.37.
USDCNY (6.4758) has declined from 6.4850 and can fall towards 6.46/45 in the near term.
USDINR (74.1550) has scope to fall down towards 74.0-73.80 before bouncing back from there. View is bearish while below 74.40/25.
INTEREST RATES
The US Treasury yields have surged following the strong US Non-Farm Payroll and the Unemployment data release on Friday. The expected corrective rally is happening now and there is room to move up further from here before resuming the overall downtrend. German Yields have also bounced-back from their supports as expected. A corrective rise is possible in the coming days and then the broader downtrend can resume. The 5Yr GoI spiked on Friday after the Reserve Bank of India’s policy meeting. Immediate resistance is there and while that holds, the yield can come down again this week.
The US 2Yr (0.21%), 5Yr (0.77%), 10Yr (1.30%) and the 30Yr (1.95%) Treasury yields have risen sharply on Friday. The expected corrective rally has begun in line with our expectation. A further rise from here can take the 10Yr up to 1.40%-1.45%. The 30Yr can extend the rally to 2.1%-2.15% on a break above 2% from here.
The German 2Yr (-0.77%), 5Yr (-0.73%), 10Yr (-0.46%) and 30Yr (-0.01%) yields have bounced-back across tenors as expected. The supports at -0.45% on the 10Yr and -0.05% on the 30Yr has held well in line with our expectation. A further rise from here will clear the way for the corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) that we had been mentioning. Thereafter a fresh leg of fall can happen in order to keep the broader downtrend intact.
The Indian 5Yr GoI (5.7661%) spiked to 5.8132% on Friday after the RBI meeting and has come-off from there. Resistance is at 5.78% which has to be broken decisively in order to move up further. While below 5.78%, the yield can fall back to 5.7% in the coming days.
