STOCKS
Dow continues to trade stable and can remain in the 26000-27000 range for some time. DAX retains its strength and keeps our bullish view intact of seeing further rise. Nikkei has bounced within our preferred narrow range and could attempt to break this range on the upside. Shanghai has moved up and could consolidate in a broad range for some time. Sensex and Nifty are bullish and can move up further in the coming days.
The Dow (26680.87, +8.92, +0.03%) continues to trade stable below 27000 and remains within our preferred 26000-27000 range. As mentioned yesterday, we are looking for a corrective fall. But whether this correction happens from here itself or after on more leg of rise to 27500-28000 is still not clear.
The DAX (13046.92, +127.31, +0.99%) has moved up further as expected. Our bullish view of seeing 13200 remains intact. The upside can extend upto 13350-13400 on a break above 13200 after which an intermediate correction is possible. As mentioned yesterday, from bigger picture DAX has potential to target 13500 and 13800 over the medium-term.
Nikkei (22864.26, +146.78, +0.65%) sustains above 22500 and has bounced to retain the narrow 22500-23000 range as expected. This keeps the chances high of the index breaking above 23000 which is much needed to see a rise to 24000 eventually.
Shanghai (3319.80, +5.65, +0.17%) has moved up further and is heading towards 3350 in line with our expectation. As we have been mentioning over the last few days, Shanghai can consolidate in a broad range of 3200-3450 for a few weeks before the next clear trend sets in.
Nifty (11022.20, +120.50, +1.11%) has risen further to test 11000 as expected. The bullish view remains intact and a further rise to 11250 can be seen in the next couple of days. Thereafter an intermediate corrective dip to 11000 is possible.
Sensex (37418.99, +398.85, +1.08%) on the other hand can test 38000-38200 on the upside in the near-term from where a slight corrective dip to 37000 is possible.
COMMODITIES
Precious metals fall on fresh weakness seen in US Dollar. Gold and Silver look bullish for the near term. Crude prices have moved up but needs to break above immediate resistances to move up further in the longer run. Copper looks bullish too but could have limited scope on the upside towards crucial resistance at 3.
Brent (43.36) has risen more than WTI (40.93) but both could test 45 and 42.50 in the near term. A break above these levels on Brent and WTI would be bullish for the near term taking them higher towards 50 and 45-48 respectively. Ranged movement within the narrow zone looks likely to continue for now.
Gold (1818.30) and Silver (20.41) both have risen sharply on fresh weakness in the US Dollar. Gold has immediate trend support near 1800-1805 which if holds could produce a sharp bounce in prices towards 1830-1860 in the near term. Silver too has managed to break above 20 and while the rise sustains, a rise towards 21 cannot be negated just now. Overall view is bullish for Gold and Silver.
Copper (2.9315) has bounced from support near 2.88/85 and while that holds, we may expect a bullish Copper for the near term targeting 2.95-3.00 again. Note that 3 is an important resistance on the longer term charts.
FOREX
Dollar Index may remain within the sideways range for some more time while Euro looks bullish along with Dollar-Yen and EURJPY. Aussie and Pound may also move up on Dollar weakness. Stronger Euro and Yuan could bring in some strength in Rupee.
Dollar Index (95.69) has just broken below our earlier mentioned lower support near 95.70. If the index sustains a break below 95.70, it could head straight down towards 95.00-94.42 in the coming sessions indicating further bearishness in the next 1-2 weeks. Watch price action over the next 1-2 days near 95.70.
Euro (1.1459) has risen well and in line with our expectation. The fall in Dollar Index has boosted the sharp rise and may take it further up towards 1.15 in the near term. View is bullish.
EURJPY (122.83) is rising and looks bullish for a target of 123-124 on the upside.
Dollar-Yen (107.17) has dipped a bit on Dollar weakness contrary to our expectation of a rise to 108. It could remain ranged above 107 just now.
Aussie (0.7027) has moved up contrary to our expectation of a fall as Dollar trades weak. We may expect a rise towards 0.71/72 if the Aussie sustains above 0.70 supported by a stronger Copper and weaker US Dollar. Watch price action near current levels for confirmation.
Pound (1.2679) moved up contrary to our expectation of a fall to 1.24 as Dollar index weakened sharply below 96. If the Dollar continues to weaken further, we may expect Pound to break above 1.27 soon.
USDCNY (6.9913) has dipped a bit. Overall we may expect sideways range trade to continue in USDCNY within 6.9790-7.0026 for the near term.
USDINR (74.93) needs to break below 74.90 today to aim 74.50 in the near term. Stronger Euro and Yuan along with the weakness in Dollar Index should boost Rupee strength today towards 74.75. On the charts there is room for a fall towards 74.50 for USDINR.
INTEREST RATES
The US Treasury yields remain lower and stable. The yields can dip in the near-term to test their key supports and then reverse higher eventually. The German yields can consolidate in a narrow range with a bearish bias. The 10Yr GoI continues to trade weak and is bearish to dip further.
The US 2Yr (0.14%) and 5Yr (0.28%) Treasury yields remain stable while the 10Yr (0.61%) and the 30Yr (1.31%) have inched slightly lower. The support at 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr can be tested in the near-term. As we have been mentioning for some time, we expect the yields to reverse higher from these support zone and move higher over the medium term targeting 0.70%-0.75% (10Yr) and 1.50% (30Yr).
The German 2Yr (-0.69%), 5Yr (-0.67%), 10Yr (-0.46%) and the 30Yr (-0.03%) have dipped slightly. As mentioned yesterday the yields can trade in a narrow range of -0.05%/0% (30Yr) and -0.45%/-0.40% (10Yr) in the near-term. Within this the bias is bearish to see downside break of these ranges and a fresh fall going forward.
The 10Yr GoI (7.9995%) has dipped below 5.80% yesterday and keeps our bearish view intact of seeing 5.78%-5.75% on the downside. Resistances are at 5.82% and 5.85% that can cap the upside incase of any intraday bounce above 5.80%.
