STOCKS
After trading in the small, sideways and narrow region, Dow (24361.45, -1.58%) finally moved down to indicate further bearishness in the coming sessions towards 23750. Near term resistance on the weekly charts have held well and there is enough room on the downside just now. View is bearish for the coming sessions.
Dax (12666.51, -1.53%) continues to move down after breaking the uptrend last week. 12200-12000 levels could again be the downside target for the coming sessions.
Nikkei (21972.53, -1.73%) has also broken below the 22400 mark and shown first signs of bearishness. While the fall continues, Nikkei could be headed towards 21600.
Shanghai (3064.94, -1.78%) also moved down below 3100 to test 3050 on the downside. An immediate bounce from 3050, if not seen could turn bearish for the medium to long term for Shanghai. Watch price action near 3050.
Following the bearish trend of the other global indices, the Nifty (10633.30, -0.52%) could also see a sharp fall in today’s session targeting 10550 or even lower. Near term looks bearish for Nifty.
COMMODITIES
65.60/70 is immediate support for WTI (66.48) as visible on the daily charts. While that holds, the crude price could bounce back towards 68-69 levels in the coming sessions. A break below 65.60, if seen would make the crude price vulnerable to a sharp fall towards 64 or lower.
Brent (74.91) has immediate support near 74.50 which may hold for now, else Brent could test lower support near 73.50-73.70 region.
Gold (1299.10) is almost stable. Although there is support visible on the 3-day and weekly charts, there is possibility of the price moving down to test 1280. A break below 1280, if seen would be bearish for Gold in the medium term opening up chances of 1260-1250 on the downside. For now we could see some trade in the 1280-1310 region.
Copper (3.0520) is trading lower and looks bearish towards 3.02. Watch price action near 3.02; if it fails to bounce from 3.02, it could be headed towards 3.00-2.95 in the medium term.
FOREX
Dollar index (94.95) touched 95 yesterday, slightly earlier than we had expected. The political turmoil in Italy seems to have spurred the demand for Dollars relative to the Euro, thereby leading to this quick strengthening. We had earlier mentioned that the 89 weeks MA near 95.63 could be a possible extension beyond 95. After that, the Dollar should dip. If it breaches 95.63, we would have to revisit this hypothesis and look for higher levels. In today’s session, a dip to 94.6 could take place before another rise towards 95.
Euro (1.1525) has been severely impacted by the political crisis in Italy and saw a low near 1.151 yesterday. It is now trading near our downside target of 1.155-1.145. 1.144 is the 89 weeks MA and could produce a bounce. On the 3 day line chart, 1.135-1.140 is also seen as possible support. Hence the downside might just extend even below 1.145. Let’s wait and watch.
Dollar Yen (108.58) did test the 21 weeks MA near 108 yesterday. As we mentioned yesterday, this could be a crucial level and a break of the same could lead to a phase of bearishness for Dollar Yen. With investors jittery regarding the Italy crisis, Yen might strengthen since it is considered as a safe asset. A break of 108 could result in a quick downmove to 106-105 (seen as crucial support on weekly candles).
Euro Yen (125.13): Euro Yen has fallen very quickly towards 125 (support on weekly candles), against our expectation of a fall by next week. This is a crucial support level and if this is broken as well, the next downside target could be as low as 120 (seen as support on 3 day line chart).
Pound (1.3248): As per our expectation of a test of levels near 1.32, Pound did test a low of 1.3205 yesterday. It could move lower over the next 1-2 weeks with the next downside target being near 1.30 (on weekly candles). A break of 1.30 could imply continued bearishness in the medium term.
Dollar Rupee (67.865) : Look for range trade between 67.60-68.20.
INTEREST RATES
The political instability in Italy has led to investors moving away from equity towards safer debt, and that has in turn, led to a dramatic fall of bond yields globally. Our earlier projection of a medium term target of 3.2%-3.3% for the US 10 Year yield might now need downward revision.
US 10 Yr Yield (2.82%), 30 Yr (3.00%), 5 Yr (2.63%), 2 Yr (2.34%):
The US 10 year yield saw a low near 2.75% yesterday and has risen from there. We believe there could be some support near 2.75% which could push the 10 Year towards 2.9% again. However, if 2.75% is broken, the US 10 year would move further down to test medium term support near 2.6%-2.5%.
The US 30 Year alongside could see a test of 2.9% if the US 10 year breaks 2.75%.
The German 10 Year yield (0.26%) could get some support near 0.18%-0.19% and could rise back up from there.
