STOCKS
Overall Global indices are all trading weak today. China looks weak in the near term while Dow and Dax could be in a short term consolidation mode. Nikkei and the Indian markets also look weak.
Dow (24180.64, -0.45%) has come down as expected and is on its way to test 24000. Note that some interim bounce could be seen from levels near 24000-23750 which could produce a slight bounce before resuming its fall.
Dax (13048. 54, -0.08%) continues to trade in the 13200-12900 region. The sideways movement is likely to continue for another 4-5 sessions before the index decides to move on either side of the range. Preference would be on the upside towards 13300-13400 levels.
Nikkei (22418.11, -0.90%) has fallen and could head towards 22250-22000 in the next few sessions.
Shanghai (3280.95, -0.69%) has broken below 3300, indicating continuation of the current fall towards much lower levels. The upside momentum is lost and the price action is dominated by the bears just now. While the index falls, it could test 3250-3200 levels in the medium term with some small interim upward corrections. Overall the view is bearish for the coming sessions.
Nifty (10118.2\5, -0.09%) was almost stable yesterday, fluctuating in the 10147-10069 region. AS mentioned yesterday, a break below support at 10050 could turn the index more bearish towards 9950-9900 in the medium term; else another up-move towards 10300-10400 is possible.
Sensex (32802.44, -0.20%) is trading just above important support at 32500 and while that holds, some scope of bullish possibility remains on the cards, A break below 32500 would confirm an upcoming fall targeting much lower levels.
COMMODITIES
Gold (1266.39) has fallen to test important support near 1260. A maximum downside of 1250 can be expected in the coming sessions followed by a sideways consolidation in the 1250-1285 region, if not a sharp rise towards 1300. 1260-1250 is a crucial resistance zone and in case that breaks on the downside, it could indicate a sharp fall to much lower levels. While above 1250, the downside possibility could be negated.
WTI (57.37) and Brent (62.60) both are stable just now. Note that there is scope for WTI to test lower levels of 57-56 in the near term while the longer term resistance near 59 holds. Brent, on the other hand, is trading ust above crucial support at 62 which if holds could prove to be bullish for Brent in the coming sessions. While immediate direction for Brent and WTI looks different just now, on the longer term the positive directional correlation is likely to remain.
Copper (2.9570) has come down to our initial downside target of 2.95, in a single session i.e much faster than we expected. Our view of a sideways movement in the 3.05-3.15 for some more sessions has not materialised and while the price remains below 3.00, near term looks bearish. An increase in the inventories, fall in the Chinese stock markets and doubts of strength in the Chinese demand for the red metal seem to be the reasons for such a sharp fall in a single session. Downside target below 2.95 would be important support at 2.90.
FOREX
Dollar-Index (93.279) touched a high of 93.49 yesterday and closed at 93.32, just above resistance near 93.20 (earlier mentioned as 93.25-93.30) on the daily charts. It is currently trading at levels around 93.28 and could move up towards resistance at 93.75-93.80 on the 3 day charts, while it stays above 93.20.
Euro (1.1830) broke support (1.185) on the daily charts to close at 1.1825 yesterday, and is currently trading at levels around 1.1830. While the Euro stays below 1.185, it could come off towards 1.1775-1.18 to test support on the 3 day charts in a week’s time.
Dollar-Yen (112.24) has dropped slightly on the back of a sharp rise in Japanese 10 yr yields (see Interest Rates below). However, it is likely to maintain its rise towards levels near 112.75-113 this week.
Pound (1.3429) has dropped from yesterday’s high at 1.3482 and is moving towards support near 1.335 on the daily charts; thereby looking set for a round of range-wise oscillation between 1.335 and 1.35 for few days before it moves towards levels beyond 1.35.
Dollar Rupee (64.385) has stayed above support at 64.20-30 and while above that, can move up towards 64.60+ by next week. Weakness in the Euro and bearishness in Nifty are likely to help in this rise.
INTEREST RATES
The US yield differentials have all moved down sharply breaking below immediate support levels. The 10-5Yr (0.21%), 30-10Yr (0.38%) and the 30-5Yr (0.59%) are down from previous levels of 0.23%, 0.39% and 0.63% respectively. The fall could be attributed to the weakness in the 10YR (2.36%, prev 2.77%) and 30Yr (2.74%, prev 2.77%)
The US yields have paused a bit. The 5Yr (2.15%) is stable while the 10YR (2.36%) and the 30Yr (2.74%) are down by 2bps.
The Japan-US 10Y (2.29%) came off sharply after trading along the channel resistance for almost a month. If the resistance holds, good, the current fall would take the yield spread to lower levels of 2.2%, leading to the much awaited correction in Dollar Yen and Nikkei.
The German-US 10YR (-2.04%) has bounced a bit and could move up towards -2.02% or higher in the near term before resuming its fall back to current levels. Near term looks bullish within an overall longer term down trend.
The Japan 10Yr (0.07%) has risen sharply and is testing resistance at current levels. It could come off towards 0.055% in the near term.
