STOCKS
The US market hitting fresh life high has triggered a lot of buying in the global markets, helping almost all the indices. Most of the Asian markets are closed today like China or open with shortened trading hours due to Lunar New Year.
Dow (20100.91, +0.16%) has finally broken above the psychological level of 20000 after 6 weeks of stalling around it. Now as long as it stays above 20000, the chances of seeing 20500-700 remain strong.
Dax (11848.63, +0.36%) has broken out of the range of 11400-700 following the strength in the US markets and is trading just 4.5% away from the life high of 12391. The immediate resistance comes at 11900-12000 above which the possibility of a new life high may become strong but a failure near 12000 may push it back to 11700.
Shanghai (3159.17, +0.31%) has broken above the interim resistance of 3150 and may rally towards 3175-85 now. The Chinese market is closed today.
Nikkei (19474.15, +0.37%), contrary to expectations, has been aided by a strong bounce back in Dollar Yen (114.90) to rise above the resistance of 19100 and get closer to the 12-month high of 19615. While the weekly candle looks bullish at this point, the index still requires a firm break above 19600 to extend the rally to 20000-200.
Nifty (8602.75, +1.50%) has overshot our targets of 8550-75 and now may rally to 8740-8800 even before the budget if the current momentum remains intact.
COMMODITIES
Gold (1186.03) came off from levels near 1220 in the beginning of the week keeping the 1215-1230 resistance zone intact. This could be taken as an immediate near term reversal which could possibly extend towards 1160-1150 in the early sessions next week. The fall in Gold has played well while the support near 99.50-99.00 on Dollar Index has taken it higher to 100.56. While the Dollar Index moves higher towards 101.00-101.50, Gold could see some more weakness in the near term.
Silver (16.73) is also headed lower while the daily resistance near 17.50 holds well. It could move lower towards 16.50-16.00 in the coming sessions.
Brent (56.22) has moved up a bit and could re-test 57-58 levels while WTI (53.85) could move towards 56. Directional clarity is not there while the range-bound movement continues in Crude prices. We could possibly see the prices remain in the broad 53-58 and 50-55 region for yet another week.
Copper (2.6615) came off from levels much below 2.7530 and while that holds, it could come down to test the mid-levels of 2.60-2.58 (within the 3-month broad 2.45-275 zone).in the near term. While below 2.75, we may negate any immediate bullishness as mentioned in the earlier report.
FOREX
Dollar strength has weakened the Majors but most of them are testing near term supports. Only a break below the supports may confirm extended Dollar strength.
Dollar Index (100.55) is giving initial hints of a short term bottom but that must be confirmed with a break above 101.20-25. Till the confirmation, the chances of the bears attempting a selloff again can’t be ruled out. Repeat – the most important support remains unchanged at 99.50-00.
Euro (1.0679) failed to reach our target/resistance of 1.0810 and now after a sharp decline, is testing the near term support at 1.0660-50 below which the near term trend will be down. Wait and watch if it manages to bounce from the support or not.
Dollar-Yen (114.90), contrary to expectations, has broken above the immediate resistance of 114.00 and confirmed a bullish Double Bottom pattern, opening up 115.60 and even 116.30 on the higher side.
Pound (1.2587) has overshot our initial target of 1.2600 to register a high at 1.2673, a bit short of our higher target of 1.2800. The highly overbought state may initiate a corrective phase now, with a possible range in 1.25-1.27.
Aussie (0.7530) remains weak but as it manages to stay above the support of 0.7520 though tentatively, it has found a pause in the downtrend. A break below 0.7520 may push it down to 0.7450-25 fast.
Against Dollar, Rupee (68.08) found a little strength on Wednesday but the contracting range of 67.90-68.40 remains unchanged. With no significant data coming today, the week may end in the same range.
INTEREST RATES
All the US bonds are seeing the yields breaking above their immediate resistances. With the US 30-5Yr yield differentials (1.12%) rising along with a rising 5Yr yields (1.97%), the chances of the 30Yr (3.09%) testing the long term resistance 3.20-25% once more looks strong.
The failure of German-US 10Yr (-2.03%) to rise above the resistance of -2.00% keeps the Euro (1.0679) under pressure and it remains to be seen if the German-US 2Yr (-1.88%) finding support near the trendline at -1.90% is able to help Euro or not.
