Market Morning Briefing

GOOD MORNING!

EQUITIES
The markets are in a pullback mode now. In the next couple sessions, it should be clear if it is the expected pullback only before resumption of the downtrend or it is something more like a true reversal.

Dow (15794.08, +1.06%) has continued its rally but the downtrend may resume anytime till 15950-16100 is not decisively crossed. It has shown the first sign of losing momentum since the 2009 bottom and opens the door towards 14700-900 initially with short rallies interrupting the fall.

Nikkei (14612.91, +1.04%), despite a bounce from our support of 14000 now, may face selling pressure any time till 14850-15100 as it remains in a bear market. Below 14000, our targets of 13700 and 13200 may be achieved quickly.

Shanghai (2072.98, +1.40%) is testing the initial resistance of 2060-80 after which it needs to break above 2120-30 to reverse the longer term downtrend it is trapped in. Bears may attempt to push it down from any of these two areas.

Dax (9301.92, +0.49%) broke out of a Triangle pattern on the upside but the medium term downtrend remains unchanged. At the higher levels, the bears are waiting at 9300-80. The maximum upside looks capped to 9500-50.

Nifty (6063.20, +0.45%) is rising but the much labored rally doesn't inspire much confidence for the bulls yet. The price action near 6100-10 is to be seen to gauge the actual strength, possibly on Monday morning itself. A failure to sustain above either 6080 or 6100-10 would bring the weakness back. We do not see the current rally going above 6150-90 at this moment.

COMMODITIES
Gold (1269.229) continues to remain ranged within the 1253-1274 regions. Only a break above 1274.42 would ensure a rise to 1295-1300. But we cannot negate the chances of a fall from crucial resistance near 1274.42 just now. Also note that it is testing resistance on the weekly charts near current levels.

Silver (20.015) is ranged and in an eventual rise towards crucial resistance near 20.5. A break above 20.5 would ensure a rise towards 21-21.5 else the 20.5 level would succeed in pushing prices back to 19-19.5.

Copper (3.2440) continues to rise targeting 3.25 in the near term. No major movement is expected for now.

Brent (109.31) shot up sharply and has now come off a bit from resistance zone near 109.83-110. A rise past this zone could take it higher to 111-112. Overall the long term trend remains up.

Nymex WTI (100.070) has risen sharply stretching its rally above 100 as expected. Need to watch crucial resistance zone coming up in the 100.75-101.8 levels which if holds may push prices back to 98-97 else we may see a further rise past 102 towards 104. prices back to 98-97 else we may see a further rise past 102 towards 104.

CURRENCIES
The Dollar Index (80.7250) has not been able to break the higher end of the 3 month long range of 79.70-81.50 remaining stuck inside the broader range. A successful break above 81.50 may take it sharply to 81.85-90 and then 82.50-60. Below 80.35-40, it may test 80.15on the downside, after which testing the major support of 79.60-70 is possible.

The Euro (1.3624) is trading inside a contracting Wedge pattern in a show of decreasing bearish momentum. It must break above 1.3660-90 to reverse to an uptrend which may come immediately or after another dip this week. The medium term uptrend may be fully established on a break above 1.3750.

Dollar-Yen (102.39) has achieved our target of 102.40 but staying below 102.50-103.50, we may still see a journey towards 98 in the coming days.

The Euro-Yen Cross (138.64) has achieved our initial target of 139.60-70 and may extend it to 140.35-40 now where it may acquire more strength t attempt a rally towards 142. It has bounced from a major monthly trendline support at 136.20 to break above 138 to negate any immediate fall.
Pound (1.6414) has bounced from 1.6250 as expected and may reach 1.6475-1.6510 now where the price action will determine the next course of action in the short term.

The Aussie (0.8950) is struggling near the resistance zone of 0.90-0.91 after bouncing back sharply from our support zone of 08680-0.87. A bigger rally will be signaled on a break above 0.90-0.91. A failure to break above 0.90-0.91 may bring back the weakness.

Dollar-Rupee (62.2875) may open flat to negative near the support of 62.20-25 today. Below 62.25, Dollar Rupee may remain weak and fall to 62.10 and then 61.70. To resume uptrend, it has to break above 62.50 and 62.80.

INTEREST RATES
The US 10Yr (2.67%) dropped after the NFP data came out lower than expected. All the charts suggest that the yields may see a rise as seen by the rise in the 10Yr-5Yr yield differential (1.21%) and the 30Yr-10Yr yield differential (0.99%). We may see the 10Yr go up to 3.00% if it is able to move past the resistance near 2.75%, as seen on the weekly charts.

The German 10Yr (1.66%) dropped after seeing a slight bounce on Thursday. Trading near the support zone we can expect the yield to target 1.75%. The German-US 101Yr differential (-1.01%) is up and is now ranged between -0.90% to -1.10%. The UK 10Yr (2.71%) also saw a drop but it can target 2.80% if it is able to rise past 2.75%.

The Japan 10Yr (0.60%) is stable and has not seen any major movement beyond the 0.60% - 0.62% range for the last two weeks. We may see a drop to the support near 0.50% if it is unable to move past 0.65%.

The Indian 10Yr GOI yield (8.73%) remained stable. It is ranged between 8.65%-8.85% for now and is expected to remain in that range for the next few days.

DATA TODAY
No major data release today.

FRIDAY'S DATA

UK Trade Balance
... Expected -9.30 £ Bln ...Previous -9.78 £ Bln ...Actual -7.72 £ Bln

US NFP
...Expected 185 K ...Previous 75 K ...Actual 113 K

US Unemployment Rate
...Expected 6.7 % ...Previous 6.7 % ...Actual 6.6 %

US Debt Ceiling - - -

CA Labour Force
...Expected 20.00 K ...Previous -1.70 K ...Actual 29.40 KNo major data release today.