STOCKS
Dow (23439.70, +0.07%) has very near term support at 23320 and has some chances of moving up from here towards 23500 and higher. A break below 23320 would take it lower towards 22800 in the near term.
Dax (13074.42, -0.04%) moved into our support zone of 12900-13000 as mentioned yesterday and bounced back sharply from the intra-day low of 12960. Note that 12900 is likely to act as an immediate support and while that holds, the index may either trade sideways above 12900 or rise back towards 13200 and higher.
Nikkei (22441.24, +0.27%) has formed near term top at 23382 and it does not seem very likely that the index would get back to those levels in the coming sessions. Rather we may expect a test of 22170 in the near term followed by a small rise. Keep an eye on the Dollar Yen which could find some support near 113.40/50 and if the currency pair rises back towards 114, Nikkei could gain a bit this week.
Shanghai (3437.97, -0.29%) has come off after testing 3450 on the upside. While 3450 holds, a downside test of 3440-3420 is possible; else if the rise sustains above 3450, we may target 3500 in the medium term. A rise in the index could be boosted by the rise in Copper (3.1165) as the metal is also rising from support levels and looks bullish for the near term.
Nifty (10224.95, -0.94%) has been falling in line with our expectation and while the fall continues, the index may come down to test 10125-10100 levels in the coming sessions. Note that 10100 is a decent support and could produce a bounce taking the index back towards 10200-10250 in the medium term. Near term looks bearish.
COMMODITIES
Gold (1275.74) likely to trade quietly in the 1290-1260 region for some time before moving up sharply to levels above 1300. While long term looks bullish, the price lacks momentum just now and needs some trigger from movement in the US Dollar Index as well.
Brent (62.97) is likely to move down towards 62-61 as mentioned yesterday. Upside room towards 65 is still open for another attempt but the price action looks bearish for the coming sessions.
WTI (56.64) is almost stable, trading below important resistance near 58.50. Medium to long term looks bearish. Initial target could be seen at 55 on a break below 56.
Copper (3.1165) has bounced from immediate support near 3.05and could now be headed towards 3.20/25. Near term looks bullish while above 3.00-3.05 levels.
FOREX
Although the Euro (1.1671) trades a little higher and might even try to test 1.1725-45 on the upside, the Dollar Index (94.49) continues to have Support in the 94.35-20 region, with chances of new rise towards 95+ in the next couple of weeks, as mentioned yesterday.
This suggests limited upside for the Euro, but keep an eye on the trajectory of German yields (see Interest Rates below).
In the meanwhile, Dollar-Yen (113.64) remains biddish. With Support at 113.00, we have to see whether there will be a strong rise past 114.00 now or not. The Euro-Yen (132.64) trades a tad higher than yesterday. If it tries to rise towards 134, it might pull Dollar-Yen up with it also.
The Pound (1.3115) dipped to 1.3061 yesterday but did not test 1.3000. Look for an overall range of 1.30-32 over the next few days with chances of fresh bullishness. The Aussie (0.7634) may have potential for a rise towards 0.77 if the immediate Support at 0.7600 continues to hold. Else, in case of a break below 0.76, it can dip to 0.75 first.
Dollar-Yuan (6.6418) seems to be hesitating a bit in rising past 6.65. Let us see if it continues to remain above 6.6250 over the next few days.
Dollar-Rupee (65.4250) might dip a little towards 65.30-20 over the course of the week.
INTEREST RATES
Keep an eye on the German 30Yr (1.31%) to see whether it will be able to rise past Resistance at current level and whether the German 10Yr (0.42%) will try to rise past 0.50%. Our preference is for the downside. Should the yields rise instead, it will call for a reassessment of the market.
Looking at the German yield Curve, the 30-5Yr Spread (1.627%) may also have limited upside from here.
The US yields continue to rise, especially at the short-end of the Curve with the 2Yr now at 1.69% and no signs of fatigue. The Yield Curve continues to flatten, with the 30-5 (0.80%) and 30-10 Spread (0.47%) trading below long-term Resistances.
