Market Morning Briefing

GOOD MORNING!

EQUITIES
Dow (16504.29, +0.16%) is very close to our target zone of 16700-800, after it closed above the 13 year old resistance line of 16200. The trend remains firmly up but we would keep an eye on the broader band of 16800-17600 as a lot of projections converge there. Initial sign of weakness will come only below 16300.

Dax (9552.16, -0.39%) has nearly met our target of 9600 in just two days of mentioning it on this space. We repeat, exercise a bit of caution here in this area of 9600-9650 for any sign of weakness though the trend remains firmly up.

Nikkei (16291.31, +0.69%) has finished the year with the biggest gain in the last 40 years. It continues its rally after the classic Dow theory signal of a new bull market appeared finishing its 20 year long bear market. From that perspective, the next major dip would be an excellent opportunity for long-term investing in Japan for the next few years. In the short term, weakness would come only below the zone of 15950-16000.

Shanghai (2095.55, -0.09%) has faced rejection from our resistance at 2115 and come down. Below 2068, the fall will continue. Unless 2165-75 is taken out, the bears will continue to dominate on every rally. There is a fair chance that the broader range of 2030-2250 may continue for a few months more.

Nifty (6291.10, -0.36%) keeps trading between the 5 year resistance zone of 6350-60 on the upside and 6260 on the downside. The daily candle created was a Bearish Engulfing one, with strong bearish connotations but the confirmation for this pattern would come only below today’s low of 6273. The BankNifty shows the same pattern and more weakness. Strength would return only on a close above 6350-60.

COMMODITIES
Gold (1198.45) came off sharply from the 13-day MA at 1213.33. While below 1225, the downtrend continues with some bearish pressure and we could see a fall towards support near 1180-1175 before bouncing thereafter. Only a break above 1225 could signal a fresh up move towards 1250

Silver (19.547) has fallen and is at a crucial level testing long term support and channel resistance at current levels. Higher chances of a bounce from here towards 21-21.5 if the support holds ,else may see a fall to 19-18.5.

Copper (3.3875) remained stable but still within the resistance zone of 3.39-3.40. May see some more consolidation this week between 3.35-3.40. Unless a break above 3.40, near term downtrend continues.

Brent (111.26) has fallen sharply and is finding it difficult to sustain near 112.5. While below this level we may see a movement within the 112.5-111 region before an eventual rise towards 114. Overall it is in a longterm uptrend.

Nymex WTI (99.30) has fallen as the 100-day MA resistance holds. While in an overall uptrend, a movement within 99.02-100.77 could be seen. Only a break above 100.81 would signal a rise towards 101-103 in the near term.

CURRENCIES
Dollar Index (80.02) is yet to break any of the overhead resistances and as a result, is pushed by the bears at every opportunity. It is testing the short term support area of 79.85-95, below which the weakness may take it towards 79.65 and then 79. Holding 79.85-95, it may make another attempt to break 80.65-95.

Euro (1.3798) had rallied sharply to test the long term resistance zone of 1.39-1.3920 and faced a subsequent sharp rejection. Now it has again come close to the immediate resistance area of 1.3830-60. As long as Euro fails to close above this zone and then 1.39-1.320, it will remain under pressure. Major supports come at 1.3720 and 1.3650 now.

Dollar-Yen (104.92) has pulled back a bit immediately after it achieved our first target of 105.50 making a new 5-year high at 105.41. The next target of 109 remains open. Any sign of weakness will be seen only below 103.50 and 102.50.

The Euro-Yen Cross (144.75) reached our first target of 144.60 after it broke out of the range of 140.90-142.90 on the upside and produced another fast move as expected. Next targets remain at 147.60 and 149. Supports come at 143.90-143.50.

The Pound (1.6483) reached our initial target of 1.6550 in line with expectation and hit a new 2 year high at 1.6578. As long as it stays above 1.62-1.63, more rallies may emerge towards 1.6740-50. Some negative divergences are visible implying a lack of bullish momentum, but that will come into play only below 1.6370.

The Aussie (0.8922) bounced back sharply from 0.8833. Earlier, it was rejected from our resistance area around 0.8975-0.90 which it must cross and sustain above to trigger any hope for a possible move towards 0.91-0.92. Till then the downside remains open towards 0.87-0.8750.

Dollar Rupee (61.91) may open flat near 61.85-90 today. It has spent the third consecutive session inside the narrow range of 61.83-62.16, after failing once again to break above our resistance zone of 62.16-20. Last week’s range was a mere 40 paisa. Keeping this range contraction in mind, we can expect bigger moves only beyond 61.65-70 on the downside and 62.20/62.45 on the upside now.

INTEREST RATES
The US 10Yr (2.97%) has remained stable. The Pending Home Sales data came out lower than the expectation yesterday an indication that the higher borrowing costs are affecting the Housing Market. It is testing the long term resistance at the current levels. A fall to 2.50% may be expected if the resistance holds or a rise to 3.05% or higher. The 5Yr (1.71%) has also come up to a resistance at current levels.

German 10 Yr (1.93%) remained stable after the sharp rise on Friday and is testing the resistance near 2.00%. A break above the resistance and we may see a rise to 2.05% or a fall to 1.80% on the downside. The Japanese 10 Yr (0.73%) moved past our target zone of 0.65%-0.70% as the Yen weakened. We can expect it going up to 0.75%-0.80% if the Yen is unable to recover.

The Indian 10Yr GOI yield (8.92%) is consolidating in the range of 8.75%-9.00%. With the low volatility in Rupee we expect it to remain in this range.

DATA TODAY

14:00 GMT or 19:30 IST US Case Schiller
...Previous - 13.30

15:00 GMT or 20:30 IST US Cons Conf
...Previous - 70.40 %


DATA YESTERDAY
No major data release yesterday.