Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
The marginal new highs without any kind of momentum in the US and European markets continue.
Dow (16937.26, -0.06%) is stuck in the range of roughly 16700-17000 (+/- 50) for the last 3 weeks and currently no sign for any extension beyond 16600 or 17200 is visible. It may keep trading in this range for a few more sessions. The Dax (9920.92, -0.66%) keeps trading in the range of 9800-10050 but another push up to 10300-400 remains on cards as long as it stays above 9800-700.
Nikkei (15313.21, -0.36%) has broken above our 15250 to end the correction and rallied to a five month high. But this rally may face a bit of selling pressure from this area of 15400-700. The Shanghai (2029.68, +0.26%) has bounced exactly from our 2010 levels to keep the broader sideways movement intact which may continue as long as the price holds above 2010-1990.
A break below 7480 in Nifty (7493.35, -0.24%) brought 7450 but a bottom may have been made at 7442, which must be confirmed by a break above 7510 and then 7560 today. Expect the trapped bears to take Nifty to 7560-90 and higher.
COMMODITIES
Silver (20.83) is stable and has paused at levels above 20.5. We need to see if it would take some rest after the sharp rally or will carry on targeting 21.5-22.5 levels. Near term movements may be restricted within 20-20.8 region. Gold-Silver ratio (63.169) has been falling sharply and may soon target 62.37 before starting a fresh rise.
Gold (1316.57) has been rising for quite a few sessions now but has tested weekly resistance which if holds may push it back to 1250-1200. Overall long term downtrend is in force.
Nymex WTI (105.65) is trading lower but may bounce from upcoming support near 104.8-105. Also note that the Gold-WTI spread has moved towards channel resistance near 12.5 just as expected and may now come off to 12-11.8 levels indicating a rise of WTI against Gold.
Brent (113.89) came off sharply from crucial resistance near 115.6 levels and may now retrace the rally that started from 107.7. The sharp break of the 106-110 region has now set the range of 112-117 where the upcoming movements may be seen. For now we may see a fall to 112.6-111.7 before bouncing back towards 115.
Copper (3.1395) came off from the channel resistance near 3.15 on the daily and may now target 3.10-3.07 before resuming further rise.
FOREX
The lack of any serious trigger has kept the currency market almost unchanged. Please keep note, the seasonal June-July cycle of Dollar top may go against the Dollar bulls.
Euro (1.3592) has given the initial signal of strength but it needs to confirm the bullishness by a break above 1.3680-90. A break above 1.3690 may lead to rallies to 1.38 or more.
Dollar-Yen (101.87) is rebounding from a dip to 101.60 last week. We see it ranging in 101.50-102.75 for the next several days. The Euro-Yen (138.48) still runs the downside risk of testing 137 but there is a bullish reversal possibility, suggested by indicators, to be confirmed only on a break above 139.50-60.
Pound (1.7022) is rising again after the correction and may achieve our next target of 1.71 within a day or two. Any correction should be limited to 1.69 now.
The Aussie (0.9423) is hitting the 3-month high now and a close above 0.9440-60 today will open the door to 0.9550 levels.
Dollar-Rupee (60.20) is and may continue trading in the range of 60.00-50 for a session or two more. Trade this range with strict stoploss beyond the boundaries.
INTEREST RATES
The US 10-5Yr yield differential (0.92%) has been falling since Nov’13 and if this continues it may target 0.87-0.85% indicating a further fall in the US 10 Yr yields (2.62%). The US 5 yr yield (1.70%) and the US 30 Yr yield (3.45%) are stable for now.
The German 5Yr (0.39%) is just above crucial support at 0.37% and may rise a bit towards 0.40-0.45% in the coming weeks. The German 10Yr (1.32%) has fallen and may head towards upcoming support at 1.2%. The Euro (1.35930) has been ranged for the last three sessions and unless rise above 1.3609is seen, it is difficult to see strength coming in.
The Resistance on the US-Japan 10Yr spread (2.04%) continues to hold for now as the yield spread remains stable near the 2.0-2.04% zone while Dollar-Yen (101.87) has fallen and seems to strengthen in the near term.
The Indian 10Yr GOI (8.78%) has risen sharply and may target 8.81-8.86% in the coming sessions. The broad 8.5%-9.10% zone may hold for some more time in the near term while the rates may fluctuate in the said region.
DATA TODAY
8:00 GMT or 13:30 IST GER IFO Business Climate
...Expected 110.20 ...Previous 110.40
8:00 GMT or 13:30 IST GER IFO Business Situations
...Expected 115.00 ...Previous 114.80
8:00 GMT or 13:30 IST GER IFO Business Expectations
...Expected 105.90 ...Previous 106.20
14:00 GMT or 19:30 IST US New Home Sales
...Expected 442 K ... Previous 433 K
14:00 GMT or 19:30 IST US Cons Conf
...Expected 83.60 ...Previous 83.00
13:00 GMT or 18:30 IST US Case Schiller
...Expected 11.70 % ...Previous 12.37 %
DATA YESTERDAY
US Existing Home Sales
...Expected 4740 K ... Previous 4660 K ...Actual 4890 K
The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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