STOCKS
Almost major indices have immediate resistances on the upside and could either remain stable or dip over the next couple of sessions.
Dow (24462.94, -0.82%) came off on Friday but while the index remains above 24250, there could be chances of a rise back to levels near 25000. A break below 24250, if seen could trigger a fall towards 24000 or lower.
Dax (12540.50, -0.21%) is down slightly. As mentioned last week, the resistance near 12600-12650 is important and while that holds, a dip back towards 12400 is possible.
Nikkei (22092.24, -0.32%) rose in the last few sessions as expected but could limit its upside to 22500-22550 levels in the near term. A dip towards 21800 could be seen if the resistance near 22550 holds strong.
Shanghai (3061.28, -0.33%) is stuck in the 3050-3150 region and may remain stable for a few sessions before deciding on further direction. A break below 3050 could open up chances of a fall towards 2900. Watch crucial levels near 3050.
Nifty (10564.05, -0.012%) is stable below 10600. Either the index may remain stable for a few more sessions or come off to test 10450.
COMMODITIES
Brent (73.94) looks poised just now but has some chances of moving higher towards 75-76 which is an important resistance zone. A fall thereafter could be seen targeting 72-71 in the medium term.
Nymex WTI (68.19) also has some scope of moving up towards 69.0-69.5 in the next few sessions before coming off sharply from there.
Gold (1336) came of below 1340 after almost a week and if the price continues to remain below 1340, Gold could be vulnerable to a fall towards 1320-1300 soon.
Copper (3.1485) has weekly resistance near 3.20-3.22 and which if holds could push the prices down again towards 3.10 or lower. The price may trade within 3.22-3.13 region for sometime before a dip towards 3.10 or lower is seen in the longer run.
FOREX
Dollar index (90.372), as per expectation, is now testing resistance on 3 day candles near 90.25-90.50 (earlier mentioned as 90.00-90.25) and also on daily line chart. The 90.5-91.0 zone could be a crucial resistance zone, whose breach could imply a bullish Dollar in the medium term. As per our Apr ’18 Euro report, we currently prefer Dollar bearishness till May/Jun, after which it could turn bullish. Whether the downmove from 103 since Dec ’16 ends immediately, or later in this quarter, would have to be seen.
Euro (1.2276): Against our expectation, Euro broke below support near 1.23 (on daily line chart) to see a low near 1.225. The 1.225-1.215 region is a crucial support zone for the Euro and a break past this zone could imply medium term bearishness. Our Apr ’18 Euro report prefers some bullishness for the Euro till May/Jun and bearishness after that. The upmove from 1.045 since Dec ’16 could start seeing a correction in this quarter.
Dollar Yen (107.80) as expected, has moved up and is now very close to its previous high of 107.78 (also seen as resistance on daily candles). Both possibilities are equally likely now: a breach past 107.8 to target 21 week moving average near 108.88 or a bearish turn (breaking support on daily candles) towards 106.5 and lower.
Euro Yen (132.33) seems to be breaking support on daily candles near current levels and is near resistance on weekly candles, which increases the likelihood of a dip. There is support near 131 on weekly candles which could be tested if Euro dips towards 1.215 while the Dollar Yen stays near 108.
Pound (1.4021) saw 4 consecutive sessions of downmoves last week from 1.4377 towards 1.40 (support on daily candles). It has already broken support on daily line chart near 1.408 and is likely to dip further to test crucial long term support level near 1.38-39 on weekly line chart. If this support also breaks, Pound could turn very bearish in the medium term.
Dollar Rupee (66.125): May test 66.40-50 this week. See some profit-taking from there.
INTEREST RATES
Last week saw US yields rising towards record highs due to improving US economy indicators and rising commodity prices. In the last 2 weeks the following releases had all indicated a growing US economy: Industrial Production, Capacity Utilization, US Retail Sales data, unemployment claims data and the Fed minutes. In addition, Crude’s rise towards 74 has increased inflation expectations and is fuelling the rise in US yields.
US 10 Yr Yield (2.96%), 30 Yr (3.145%), 5 Yr (2.81%), 2 Yr (2.46%):
Repeating Friday’s comment, the US 2 year yield has reached its highest levels since 2008 and could rise higher in May. Upside could be restricted to 2.5% in the near term.
The 10 Year yield (2.96%) is has breached resistance near 2.92% on medium term chart. If it doesn’t dip back towards 2.85%-2.825%, it could soon target the psychologically crucial 3% level soon. However, our preference is for the yield to dip soon.
The 30 yr yield as we expected, has moved up further towards 3.15%. We expect it to dip along with the 10 Year yield after testing levels near 3.2%
