STOCKS
Overall, Global indices have all seen a bit of fall over the last couple of days, but the Eastern hemisphere could be nearing Supports, readying for a bounce.
Contrary to expectation of a rise to 24000, the Dow Jones(22686.22, -660.02, -2.38%) has fallen from near 23400 itself, pushed down by the 21-MA on daily line chart at 23457 and pulled down by the nasty drop in Apple. Some more dip towards 22000 is likely in the near term, which might/ might not turn out to be an important/strong Support.
The Dax (10416.66, -163.53, -1.55%) too fell yesterday. Important Support seen near 10300. That needs to hold to trigger a bounce towards 10900. Else, a break thereof could push could push the Dow down towards 10000 in the medium term.
Nikkei(19407.40, -607.37, -3.03%) plays catch up with the rest of the market, opening lower. But it possibly has a strong Support near the current level on the Weekly Line chart.
Shanghai(2483, +0.73%) dipped below 2450 to a low of 2440, but has moved back up, possibly on good hopes of a US-China resolution. In any case, we note that 2450-00 is a strong long-term Support.
Although the Sensex (35513.71,-1.05%) & Nifty (10672.25, -120.25, -1.11%) saw a dip yesterday, they have Supports coming up at 35250 and 10600 respectively, which could potentially produce a bounce.
COMMODITIES
Precious metals are trading higher and could rise for a couple of more sessions before hitting respective resistances. Copper continues to trade in the Red while Crude prices are attempting to move higher and looks bullish for the near term.
The US government plans to release its weekly oil and product inventory report today (2 days later than normal) because of the New Year’s holiday.
Brent (55.89) and Nymex WTI (47.12) are trading at resistance levels on the daily candles. A break above 56 and 48 respectively is required to turn bullish towards 58 and 50 respectively for the near term. For now, we watch price action near current levels and if the crude prices manage to break above immediate trend resistances.
Gold (1298.90) has risen sharply and is almost to test immediate resistance zone of 1300-1320 from where a short corrective dip is possible in the near term towards 1270. Above 1320, there is scope for a rise towards 1350 as seen on the weekly line charts. Near term looks bullish while the US Dollar does not seem to be impacted and remains ranged.
Silver (15.89) is trading higher as well, breaking above the immediate resistance on the 3-day chart. Note that 16.50 is a decent resistance on the weekly candles and may hold, pushing the price back towards 15within the corrective dip.
Copper (2.5810) has some hope of taking support at 2.55 and bouncing back towards 2.60 and higher but if the price fails to sustain above 2.55, it could turn further bearish towards 2.50. The fall came in after the Apple sales forecast was cut owing to decrease in Chinese demand and lower China manufacturing PMI came in for Dec’18.
FOREX
Currencies that saw a flash crash yesterday have recovered a bit but could again turn bearish in the longer run. We could see some weakness in the major currencies while the US Dollar may strengthen a bit in the near term. Yen, Aussie, Pound and Rupee continue to remain volatile. Weakness in Copper is a concern for weakness in Aussie and other commodity-currencies for the near term as continued fall in Copper could make them bearish.
Dollar Index (96.27) is trading lower and has scope of re-testing 95.75-95.60 on the downside. Overall broad down-channel is holding on the daily candles within 97.25-95.50 in the near term. View remains bearish while below 97.25.
Euro (1.14) has bounced from 1.13 as expected and could be headed towards 1.1450-1.1500 in the next few sessions.
Dollar Yen (108.02) has recovered a bit after the sharp fall seen yesterday. Yesterday’s low near 104.78 has been the Mar’18 low and could hold as a strong support as seen on the 3-day candle chart. While above 108, the currency pair could again head back towards 110.0-110.5 levels. Also see immediate trend support on the 3-day and weekly line charts. A fall below 108-107 levels if seen could make it bearish in the medium to long term (less preferred).
Euro-Yen (123.17) could head towards 125.20 in the near term. Thereafter, if there is a rise above 125.20, we may turn bullish towards 128; else a fall from 125.20 could make it vulnerable to another fall towards 122.80-122.00 levels in the longer run.
Pound (1.2638) is trading in the middle of the channel down trend on the daily chart. While near term could see a rise towards resistance at 1.2700-1.2750, a dip back towards 1.25 is possible thereafter in the medium term. Near term could be bullish while long term looks bearish.
Aussie (0.7021) has important weekly support at 0.70 just now and lower support at 0.69-0.6850 which could be tested in the medium term before a bounce back towards 0.71 or higher is seen. A rise above 0.71 if seen next week could turn the currency bullish towards 0.73 by the end of this month. Fall in copper prices if seen could turn bearish for Aussie in the near term.
Dollar Rupee (70.20) came off to test 70 yesterday before closing the session at slightly higher levels. Resistance mentioned near 70.30/40 seems to have held well and while that continues to hold, we could possible see trade within 70.40-69.90 today followed by a dip below 70 next week. A break above 70.40, if seen could take it higher towards 70.60.
INTEREST RATES
Sharp fall in US yields, as the fall in US stocks possibly drives money into Bonds. Importantly, the US 5Yr (2.38%, down from 2.46%) could be breaking below the important support at 2.40%, coming up from 2016, that was mentioned yesterday.
The market, it is reported, is now pricing in a rate cut in 2019, a sharp reversal from the prospect of a 50 bp hike. It is quite possible that the positions of the Market and the Fed are a little extremes and the ultimate reality may lie somewhere in the middle.
In India, the 10Yr GOI moved back up to 7.4257% (up from 7.3546%) yesterday, but we still look for a dip towards 7.10-00%.
