Market Morning Briefing

GOOD MORNING!

STOCKS
The markets bounced back from their respective medium term support mention on Friday and till now, it looks like a Technical buying form an oversold state, in the absence of any compelling macro-reason or events.

Dow (16553.93, +1.13%) bounced sharply from our support area in 16300-200 to end the week with a Long-Legged Doji pattern with bullish bias. If it manages to trade above 16600 in the early part of the week, then 16750-850 can be expected. Dax (9009.32, -0.33%) has retraced the entire rise from 8900 to 10000 and maybe now it will try to bounce towards 9150-200 though the long term downtrend remains in force below 9300-400.

Nikkei (15090.43, +2.11%) is enjoying the expected pause but may find it difficult to break above 15250-400 area immediately. Shanghai (2214.13, +0.90%) found support at 2180-70 as expected and now is consolidating in the range of 2180-2230 with the bullish bias fully intact. It may attempt a rally to the final long term resistance of 2260-70 after this consolidation.

Nifty (7568.55, -1.06%) may attempt a bounce this morning based on the positive global cues. Our major support is modified to 7530-10 from the earlier 7580 due to increasing noise inside the range of 7500-7800, which may not break very soon.

COMMODITIES
Gold (1305.98) came off from the daily channel resistance near 1333. A fall below 1300 may take it lower to 1280 but while above 1300-1305 we may expect a rise towards 1340-1350 in the near term. Gold-WTI ratio (13.32) has come down a bit but is trading near crucial resistance of 13.5 which if holds may push it towards 13-12.5 in the near term. Gold may be bearish in that case.

Nymex WTI (97.98) has risen from 96 levels and if this sustains, it may target 101.15-101.81 in the near term. Brent (105.25) is whip-sawing in the 105-106 region unable to give clarity of its further movements. Unless it breaks 107-108 levels bearishness will continue to influence the price.

Silver (19.88) is fluctuating in the crucial 20.108-19.7 region. Looks bearish in the near term but need confirmation by breaking below 19.7. Long term trend is down.

Copper (3.1910) dropped sharply making an intra-day high at resistance of 3.25 on Friday. The 3.15-3.25 region is keeping prices ranged for now but while above 3.15-3.20, the near term is bullish. As said earlier, Copper prices may remain under pressure for sometime.

FOREX
The major trend may be down for nearly all the majors against the Dollar, but in the short term, an effort to build base is visible, as evident in Euro & Aussie. Short term rallies this week in the majors can’t be ruled out.

Euro (1.3402) has created two weekly candles with long legs, suggesting immense disinterest to go down. An attempt to rally towards 1.3450-75 can’t be ruled out though all the larger trends still remain down.

Dollar-Yen (102.15) is trading in the range of 101-and the range bound price action doesn’t look like ending anytime soon. Euro-Yen (136.89) bounced from exactly the major support area of 136.00-135.75 on the back of a stronger Euro. It may test 137.40-138.00 now but requires a break above 138 to really signal any strength.

Pound (1.6781) has been making new lows as expected but now a corrective bounce to 1.69 levels may be not that unexpected. A failure to bounce would mean an immediate fall to 1.6740-6700 levels.

Aussie (0.9284) has been pushed up by the long term support zone of 0.9250-9200 and that protects the nearly 5 month long range of 0.92-0.95, which is not looking any signs of breaking yet. Expect resistance at 0.9350-75.

Dollar-Rupee (61.14) achieved all our short term targets by hitting 61.73 and may have reversed the trend now. The previous support zone of 60.70-50 may be tested now and all the bounces are expected to be sold.

INTEREST RATES
Curve flattening continues in the USA with the 10-5 Yr Spread (0.80%) turning down from just below the 0.85% Resistance, as expected. However, the 30-10 Yr Spread (0.80%) seems to be finding Support near current levels. This suggests the 10Yr (2.43%) is likely to dip against both the 5Yr and the 10Yr. Take a look at the charts on http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff

The German 2Yr (0.006%), which had dipped into negative after the ECB Meeting last week is trading positive again and could suprise with an upmove towards 0.12% over the coming weeks. Keep an eye on this. It could be a big market mover. The EU CPI on Thursday (current Y/y 0.39%, expected 0.40%) will be keenly watched.

The US-Japan 10Yr spread (1.92%) has broken an important rising trendline support near 1.97% and could dip further towards 1.85%. This could push Dollar-Yen (102.15) back down towards 101.15. Take a look at http://www.kshitij.com/graphgallery/usdjpydiff.shtml#usdjpy

In India, the Indo-US 10Yr Spread (6.27%) has moved up to an important Resistance. Currently betting that this Resistance will hold and the Spread will come down suggesting the market believes in the RBI's inflation control intentions. Tomorrow's CPI release (current 7.31%) is going to be crucial. Watching.

DATA TODAY

11:30 GMT or 17:00 IST IN Trade bal (Tentative)
...Previous - 11.76 $ Bln



FRIDAY'S and SATURDAY'S Data:-
CN Trade Bal
...Previous 31.60 $ Bln ...Expected 26.0 $Bln ...Actual 47.30 $Bln


UK Trade Balance
...Previous - -9.15 £ (Bln) ...Actual -9.41 £ (Bln)

CA Labour Force
...Previous - -9.40 K ...Expected 20.0 K ...Actual 0.2 K


CN PPI (YoY)
...Expected -1.0 % ...Previous -1.1 % ...Actual -0.9 %

CN CPI (YoY)
...Expected 2.3 % ...Previous 2.3 % ...Actual 2.3 %