STOCKS
Dow (23271.28, -0.59%) has come down as expected and could soon head towards our mentioned target of 23200-23000 in the next few sessions. Note that 23000 is an important near term support and is likely to hold in the medium term producing a bounce back to levels near 23400/500 in the next week.
The downward momentum from levels below 13600 has been fast and sharp in Dax (12976.37, -0.44%). While the momentum continues it may possibly not stop at 12900 levels. A break below 12900 could then take it lower towards 12800-12600 in the next couple of weeks.
Nikkei (22210.45, +0.83%) is trading slightly higher than yesterday’s close at 22028.3, but has scope of falling towards 21800 in the medium term (maybe by end of Nov’17). Dollar Yen (112.98) trades below 113 just now and in case it continues to fall further, Nikkei would also eventually come down. Near term looks bearish.
Shanghai (3398.91, -0.11%) has come down as expected and could test 3380 as mentioned yesterday. Note that the 3380-3450 is an important region of trade for the near term and is likely to hold for some time.
Nifty (10118.05, -0.67%) made an intra-day low of 10090 yesterday exactly as expected and bounced back slightly to close above 10100. Note that 10000-10100 is an important near term support which is likely to hold in the first attempt producing a bounce back towards 10300/400. But in case 10000 breaks on the downside (it could happen next week if the Bears continue to remain strong) then the index could be vulnerable to a sharp fall by end of the month.
COMMODITIES
1260-1280 continues to remain as strong support for the near term and while that holds, some movement within 1300-1260 is possible before the upward rally resumes in Gold (1278.20). The price seems to be stable and quiet for the last few sessions and may remain so this week.
Silver (16.98) is down in line with our expectation. Sideways trade within 16.60-17.20 is possible in the near term.
Brent (61.93) could test some support near 61.00-60.85 and if that holds, a bounce back towards 63-64 would be on the cards contrary of our expectation to a fall to 60 just now.
WTI (55.33) could trade in the 54.90-56.00 region (could extend to 54.70 and 57 on either side) for a few sessions. Only a break below 54.90, if seen could take it lower towards 54 in the medium term.
Copper (3.0555) has broken immediate support levels and could now be headed lower to test 3.00-2.95 in the coming sessions.
FOREX
Yesterday, we suggested a range of 1.1850-1500 for the Euro (1.1781) for some weeks. A high of 1.1861 was seen yesterday and the Euro has come off a bit from there, despite a further dip in US yields (see Interest Rates below). Look for a near-term range of 1.1850-1710.
Dollar-Yen (113.02) has also recovered a bit from an intra-day low of 112.47 seen on break below 113.00. Possibly we may see sideways trade between 112.50-114.35 for the next several days if 112.50 turns out to be a decent Support.
The Euro-Yen (133.15) has come down a bit as the Resistance at 134.00 held well enough. However, the overall trend might be biddish while above 132.
The Pound (1.3173) is a prime candidate for range trade between 1.3025-3275 for the next several days. Good time for those who have the ability to buy low/ sell high and then reverse the trade and then do it again.
The Aussie (0.7598) disappointed by breaking below the 0.7600 support yesterday and has seen a low of 0.7559 so far today. If it does not see a sharp bounce from here, it could be vulnerable to some more downside to 0.7500.
Dollar-Rupee (65.2150) may trade between 65.10-30 over the next few days.
INTEREST RATES
US Bond yields have dipped some more after the US October CPI (+2.05% y/y) came in lower than the previous reading of 2.23%. The 10Yr (2.34%) and 30Yr (2.78%) are down from 2.38% and 2.83% respectively. We have to see if they bounce from current levels or not.
There is fresh concern in the markets about the continued flattening of the US Yield Curve, but perhaps the 10-2 Spread (0.29%) will find Support near current levels.
While there is concern in the USA about yield flattening (will someone please tell once and for all whether Inflation will rise or not), there is concern in India that Inflation will indeed rise. And that has been pushing the 10Yr GOI (7.0170%) higher. Levels below 6.8% seem to be outside consideration now.
