STOCKS
Dow continues to trade stable below 28000 and remains mixed. It will have to sustain above 27500 in order to avoid a sharp corrective fall from here itself. DAX can remain in the 12800-13200 range for some time. We expect it to break this range on the upside and move higher. Nikkei is getting support at 23000 now and keeps our near-term bullish view intact. Shanghai has come-off slightly after testing its crucial 3450-3470 resistance. It has to sustain above 3400 to keep the chances alive of breaking above 3470. Sensex and Nifty have bounced well yesterday and looks bullish to move up further.
The Dow (27778.07, −66.84, -0.24%) remains stable below 28000 and looks mixed. 27500 and 28200 are important levels to watch. As we have been mentioning over the last few days, a strong rise past 28200 is needed to become more bullish to see further rise. While below 28200 there is a danger of seeing a sharp corrective fall to 27000-26500 from here itself. A break below 27500 could trigger this fall.
DAX (12881.76, −38.90, -0.30%) remains stable within our preferred 12800-13200 range. As mentioned yesterday, a breakout on either side of this will decide whether the index will move up to 13600-13800 or fall to 12400-12200. Our bias is bullish to see an upside breakout above 13200.
Nikkei (23101.76, +50.68, +0.22%) has bounced-back above 23000 again indicating lack of sellers below 23000. The 23000-22700 support is holding well as expected and keeps our bullish view intact of seeing 23800-24000 on the upside. However, we reiterate that 24000 is a strong resistance from where we expect to see a sharp correction.
The crucial 3450-3470 resistance zone is holding well on Shanghai (3437.11, −13.98, -0.41%) However, 3400 is a good support that will need a close watch. A break strong break below 3400 will indicate that the 3180-3450/70 range is intact and will negate the chances of seeing a break above 3470 and rise to 3600-3700 for now.
Nifty (11385.35, 138.25, +1.23%) had risen well within our preferred 11200/100-11400 range yesterday. The chances look high for the Nifty to breach 11400 immediately (rather than retaining the 11200/100-11400 range for some time mentioned yesterday) and move up further to 11600 in the near-term.
Sensex (38528.32, +477.54, +1.26%) has risen above 38500 thereby negating the danger of breaking below 37700 indicated yesterday. The doors are now open for the rise to 39000-39500 that we had been expecting for some time. The upside can extend even up to 40000. Support is at 38000.
COMMODITIES
Crude prices are stable. Copper is testing crucial resistance at 3.00 which if breaks could trigger a sharp rise in the near term. Gold and Silver also look bullish but could face interim corrective or consolidation phases before another sharp move could be expected.
Brent (45.21) and WTI (42.95) continue to remain stable. A dip in prices were seen after the American Petroleum Institute (API) reported a draw in crude inventories of 4.264mln barrels for week ended 14th August.
Gold (2000.30) and Silver (27.59) have dipped a bit from higher levels seen yesterday. On Gold, there is scope for a rise towards 2040 or higher in the near term while above 1920/60. Silver (27.92) on the other hand could face interim resistance near 29 which could hold for a while before the prices start moving up again towards 30 or higher.
Copper (2.9915) has moved up to test crucial resistance near 3.00. This is after a sideways trade within 3.00-2.80 as expected earlier. An eventual break above 3 is possible soon which could then open up chances of further rise towards 3.05-3.10 in the longer run.
FOREX
Weakness in the Dollar Index continues. Euro, EURJPY, Aussie, Pound, Yuan and Rupee are likely to trade stronger against the US Dollar in the near term.
Dollar Index (92.29) could be headed towards 90 on a successive break below 91.95. Without any immediate signal for a bounce from here, we remain bearish on the index.
Euro (1.1935) has broken above 1.1920 and could be headed towards 1.20 soon. The next level to look at above 1.20 would be 1.2095. Watch for a possible rejection from either of 1.20 or 1.2095 in the near term.
EURJPY (125.89) has moved up slightly. While the Euro moves up, EURJPY could have scope for a test of 128-130 before falling off from there. View is bullish.
Dollar-Yen (105.49) has immediate support near 105 which if holds could bring in a bounce back towards 106.0-106.50 in the near term. But for now while the pair remains below 106, if the Dollar index breaks below 92.00, we may have to allow for a test of 104 on USDJPY.
Aussie (0.7237) is bullish towards 0.74 in the near term. A break above 3.00 in Commex Copper prices (refer commodities section above) could boost strength in Aussie going forward.
Pound (1.3242) has risen well breaking above 1.32 and could test 1.35 on the upside before falling off from there. Immediate view is bullish.
USDCNY (6.9208) is trading near immediate support at 6.92 after a test of 6.91 on the downside. Prices are within a clear downward channel which is likely to hold and drag the pair lower towards 6.90 in the near term before a bounce from there is seen. Immediate view is bearish.
USDINR (74.7550) closed near the lower limit of the 74.70-75.00 range and needs to break below 74.70 in absence of RBI intervention to fall further towards 74.50/25 in the near term. Watch price action near 74.70; a dip is preferred on the near term charts.
INTEREST RATES
The US Treasury yields have dipped further and could move down further in the coming days before reversing higher again. The broader view is still bullish. The German Yields remain lower as their resistances are holding well. The yields are likely to fall in the coming days. The 10Yr GoI sustains higher and keeps the bullish view intact of testing 6% and 6.10% in the near-term.
The US 2Yr (0.14%), 5Yr (0.27%), 10Yr (0.66%) and the 30Yr (1.39%) Treasury yields have dipped further across tenors. An intermediate dip to 0.60% on the 10Yr and 1.35%-1.30% on the 30Yr looks likely before we see a fresh rise again. While above 0.60% (10Yr) and 1.30% (30Yr) the bullish view is intact to see 0.80% on the 10Yr and 1.50% on the 30Yr in the coming weeks.
The German 2Yr (-0.67%), 5Yr (-0.67%), 10Yr (-0.46%) and the 30Yr (-0.03%) Yields remain lower. As mentioned yesterday, resistances at -0.35% on the 10Yr and 0.05% on the 30Yr are holding well as expected. As such, we expect the yields to come down again towards -0.55% (10Yr) and -0.15% (30Yr) in the coming days and keep the broader downtrend intact.
The 10Yr GoI (5.9881%) had bounced-back sharply from the low of 5.9625% yesterday. The immediate view is bullish to test 6% and 6.10% in the coming days. 6.10% is a strong resistance from where we expect the 10Yr GoI to reverse lower again.
