STOCKS
Dow (25803.19, +0.89%) has risen sharply breaking above our target of 25600. A test of 26000 or higher is also possible in the coming sessions. Overall the index looks bullish.
Dax (13245.03, +0.32%) is holding well below resistance at 13400 and while that holds, we could see further fall in the index towards 13000 before pausing.
Nikkei (23708.63, +0.23%) is trading below 24000 but follow through after a sharp rejection seems to be missing. If the resistance at 24000 is strong enough, the index is likely to come off towards 23250-23200 levels in the coming sessions; else some sideways consolidation may be seen in the 23500-24000 region and the price may start moving beyond 24000 in the longer term.
Shanghai (3430.08, +0.03%) has almost tested the previous highs of 3450 and is likely to pause or come off from here in the coming sessions.
Nifty (10681.25, +0.28%) and Sensex (34592.39, +0.26%) look bullish towards 10750 and 34750 respectively as we have been mentioning for quite some time. The rise may take some time and we could soon see a reversal indication for the medium term.
COMMODITIES
Brent (69.88) is trading just below important resistance at 70. No indication of a corrective dip is visible yet. On the other hand, WTI (64.42) has marched upwards moving closer to our mentioned levels of 65. Failure to come off from current levels could take the crude prices to higher levels in the near term. But before that a short corrective dip is preferred.
Gold (1341.06) has risen sharply as expected to test 1340. There is scope of testing 1350-1360 in the current rally before a short dip is seen. Near to medium term looks bullish.
Copper (3.2575) is stuck in the 3.20-3.30 region and is likely to trade sideways for a couple of sessions before starting to move on either side. Near term looks stable.
FOREX
Strong rise in the Euro (1.2204) on Friday. But now we see important/ strong Resistance near 1.2220, visible on the Weekly candles, which might hold for a week or two.
As it turns out, there’s been a strong rise in the Euro-Yen (135.04) as well and there seems to be room up to 136-138 at least.
Although Dollar-Yen (110.70) is on its way to the target of 110, it might see a sharp bounce back up from there towards 112+, given the bullishness in the Euro-Yen.
As expected, the Pound (1.3743) has moved up to and past 1.37 after its sideways consolidation. May run into profit-taking at channel resistance near 1.3825-50 on the Daily candles.
Aussie (0.7934) is moving up as expected and may test 0.80, horizontal Resistance on the Weekly Line chart.
With Euro-Rupee (77.65) having risen strongly, downside might be limited to 63.50-45 on Dollar-Rupee.
INTEREST RATES
The US 10Yr (2.5462%) continues to see consolidation around levels seen on Friday, as there is some rebuilding of confidence in US Treasury bonds after last week’s scare of China halting its bond purchases. With US core CPI data reflecting a rise in inflation, the bond market stands at a delicate juncture where a break of resistance near 2.62% on the short term charts could pull yields higher towards the medium term target of 3% rather quickly.
The US 10 Yr- 5 Yr spread (0.1997%) is also near support on the short term chart and could bounce soon, leading to some much awaited yield curve steepening. The 30-10 Yr Spread (0.30%) is nearing 10 year lows near 0.22% – 0.25% last reached in 2008-09 and is raring for a bounce as well.
We will have to wait and watch over the next few weeks how quickly global bond yields rise in this bearish scenario.
Japanese 10 Yr Yield (0.08%) has again started moving up towards resistance near 0.088-0.09% on the short term chart. We can expect this resistance to hold for some time now while the downside could be restricted to 0.07% (previous resistance level on long term charts which could now act as support).
