STOCKS
Dow has recovered sharply from the day’s low yesterday. But it needs a strong follow-through rise above 34000 to move up further from here and avoid the danger of falling below 33500. DAX has tumbled below 15000 and is now bearish to see 14500 and even 14000 in the coming weeks. Nikkei and Shanghai are closed today and will reopen tomorrow. Sensex and Nifty have come-off sharply failing to hold on to the bounce seen on Monday. The bias is negative and a further fall is possible in the coming days.
Dow (34133.03, +19.80, +0.06%) has risen back well from the low of 33765.68 yesterday. The immediate outlook is mixed. A strong follow through rise above 34000 is needed for the Dow to move up towards 35000. Important support is at 33500. A break below it and then a fall below 33000 thereafter will negate the above mentioned rise and can turn the outlook bearish to see 32000-31000 on the downside.
DAX (14856.48, −379.99, -2.49%) has declined sharply breaking below 15000 and has turned bearish. The fall to 14500-14000 that we have been mentioning is happening now. The chances of seeing 15500-15700 stands negated now. 15100-15200 will now be a strong resistance zone and can cap the upside.
Nikkei (28812.63) and Shanghai (3446.86, −28.04, -0.81%) are closed today and will re-open tomorrow.
Nifty (14496.50, −137.65, -0.94%) had declined sharply from the high of 14723.40 yesterday. The bias is bearish. A break below 14400 can drag it to 14200-14000 again. Nifty has to sustain above 14400 to delay the above mentioned fall. While 14400 holds, a sideways range of 14400-14800 is possible for some time.
Sensex (48253.51, −465.01, -0.95%) has failed to breach 49000 and has declined sharply. As mentioned yesterday, while below 49000, Sensex can revisit 47000 levels again in the coming days. A break below 48000 can trigger this fall.
COMMODITIES
Commodities are mixed today as crude prices and copper continue to trade higher while Gold and Silver have dipped a bit. Copper may head towards 4.60 while Crude prices are headed towards immediate resistances of 70/72 on Brent and 68/70 on WTI and could fall from there soon. Gold and Silver are likely tot trade within the broad 1740-1800 and 25-28 region for the medium term.
Brent (69.65) is close to our mentioned resistance at 70 which if holds could produce a decline towards 65-64 again in the coming sessions. Only a break above 70, (if seen) may initiate further rise towards 72/75/77 in the longer run delaying our expected fall from 70. Watch price action near 70 today. Preference is to see a fall from resistance at 70 itself.
WTI (66.42) has held well above support near 60/62 and could now test immediate resistance near 68/70 which if holds could produce a fall back to 62/60 in the medium term. Failure to fall from 68/70 could possibly extend the rally towards 75 on the upside but we would wait for a break above 70 for that to confirm. Watch price action near mentioned resistances of 68/70 in the very near term.
Gold (1779.50) has dipped again after a brief test of 1800 on the upside. 1800 seems to be holding as a strong resistance just now and while that holds, Gold could trade within the broad 1760/40-1800/20 region both levels being crucial supports and resistances in the near term. Unless a break on either side is seen, we may expect a ranged movement with the mentioned range to continue. In the longer run, the price is likely to turn bullish and break above 1820 eventually.
Silver (26.64) has dipped a bit but while above 26 there is scope for a rise towards 28 on the upside before again falling off from there. We may revise the broad view to 28-25 for the medium term where an initials test of 28 looks possible before a fall takes place.
Copper (4.5565) has been rising in line with our expectations and could head towards 4.60 on the upside before facing a short corrective dip from there. Overall range of 4.60-4.40 is likely to hold for now. Only a sustained break above 4.60 if seen would force us to look for further upside towards 4.75/80 in the medium term. Immediate view is bullish.
FOREX
Dollar Index looks stable just now but while above 91, there could be scope for a rise to 92. Euro trades lower and needs to bounce from support at 1.20 to keep alive hopes of an upmove from here towards 1.21-1.22 in the medium term. Aussie, Pound and EURJPY continue to look stable and could be trading within a narrow range for the near term. USDJPY may test 109.75-110 before coming off from there while USDINR needs to break below 73.80 to head lower else the broad range of 73.80-74.30 may hold for the medium term. Watch price action near 73.80.
Dollar Index (91.20) looks stable after the comments by Yellen for a possible increase in rates to keep the US economy from “overheating”. Trading slightly higher from yesterday we continue to expect a rise to 92 which should cap the upside while a fall below 91 is needed to trigger a sharp decline towards 90.50-90.00 again in the medium term.
Euro (1.2019) has dipped further but while above 1.20, there is scope for a bounce back towards 1.21 or higher. Only a fall below 1.20, if seen would drag it lower towards 1.19. Watch price action near 1.20.
EURJPY (131.32) has dipped slightly but could trade within 131-132 for the near term before eventually breaking higher towards 135 in the longer run. View is bullish while above 131.
Dollar-Yen (109.22) may test 109.72-110 on the upside as mentioned yesterday before coming off from there back towards 109 or lower.
Aussie (0.7735) looks stable and could test 0.77-0.7685 before again bouncing back to higher levels.
Pound (1.3908) is likely to remain within 1.40-1.38 for the near term. Unless a break on either side of the range is seen, there is no clarity on further direction from here.
USDINR (73.8550) tested 73.7650 on the downside but could not sustain a fall below 73.80 and instead bounced back towards 74.We may continue to look for a broad range of 73.80-74.30 to hold for the near term. A break below 73.80 is needed for the pair to head lower towards 73.50/25 in the medium term else we may expect 73.80 to hold producing a sharp bounce back towards 74.30. Watch price action near 73.80 today.
INTEREST RATES
The US Treasury yields remain stable and have not reacted much on Janet Yellen’s comment. The US Treasury Secretary said that the interest rates may have to be increased to avoid the economy from overheating. The Treasury yields have crucial supports that have to hold in order to keep the overall uptrend intact and also to see a rise again. The German yields have come-off sharply from their resistances as expected. The yields can now fall in the coming days. The 10Yr GoI can see a corrective bounce before witnessing a much deeper fall.
The US 2Yr (0.16%), 5Yr (0.82%), 10Yr (1.59%) and 30Yr (2.26%) Treasury yields remain relatively stable near levels seen in early Asian trades yesterday. We reiterate that 1.5% (10Yr) and 2.2% (30Yr) are crucial supports that have to hold to keep the overall uptrend intact. While above these supports, a fresh rise to 1.7%-1.8% (10Yr) and 2.4%-2.5% (30Yr) cannot be ruled out again.
The German 2Yr (-0.70%), 5Yr (-0.61), 10Yr (-0.24%) and the 30Yr (0.30%) yields have come-off sharply yesterday. The resistances at -0.20% (10Yr) and 0.35% (30Yr) have held well in line with our expectation. Now while below -0.20% (10Yr) and 0.35% (30Yr) the yields can fall back to -0.45% (10Yr) and 0.20% (30Yr) again in the coming weeks. A break below -0.27% (10Yr) and 0.28% (30Yr) can trigger this fall.
The 10Yr GoI (6.0146%) is getting intermediate support at 5.99%. This leaves the chances of seeing a corrective bounce to 6.04%-6.06% in the near-term before the expected fall to 5.9% is seen.
