Market Morning Briefing

GOOD MORNING!

STOCKS
The rally ignited by Draghi goes on and some solid US economic data help the markets, especially the strong Consumer Confidence Index (92.4). But the Asian markets are not that much influenced by that bullishness yet.

Dow (17106.70, +0.17%) made a new high and S&P500 (2000.02, +0.11%) made its first close ever above 2000. A small correction now can’t be ruled out and we keep watching the price action at the next resistance area in 17300-400 for short term guidance. Dax (9588.15, +0.82%) is very close to reverse the major downtrend as it continues its rally. The bears must attack immediately from 9600-800 to survive or else a rise towards a new high, even 10600-700 would emerge.

Nikkei (15518.93, -0.01%) is stuck in the narrow range of 15500-650 for the last 4 sessions and now a break below 15500 may drag it down to 15200-100 in the short term. The Shanghai (2212.02, -0.22%) is trading just in the middle ground, the range of 2170-2270 with immediate support at 2200-2190. Bear domination expected below 2170 and bull domination above 2270. Till a breakout takes place, expect fluctuations in the range of 2170-2270.

Nifty (7904.75, -0.02%) bounced back from 7860 and kept the possibility of testing 8000 levels alive. Support remains unchanged at 7850-40.

COMMODITIES
Gold (1283.77) has risen a bit but is trading below 1300. While below 1300-1320 zone, the longer term view remains bearish. Trading just above support on the weekly charts, we may see some short term upmove before falling sharply down towards 1275-1260.

Silver (19.42) seems to have paused after the downward rally so far and may remain stable in the 19-19.6 region. On the downside it may see 18.5 levels before bouncing up to 19.8-20.

Nymex WTI (93.88) is trying to rise towards 95-96 but the momentum is slow. Steady moves may be seen in the 92.7-94.6 region for now. While above 92, near term looks bullish.

Brent (102.76) is stable for now and while support near 101 holds, it may target 105-106 levels in the near term. Brent-WTI spread (8.76) is coming down towards support near 8-7.9 which if breaks may turn bearish on Brent. But if the spread rises from 7.9-8, it may rise towards 10.

Copper (3.1805) has fallen from just below resistance near 3.22 on the daily candles as expected and while that holds a fall towards 3.15-3.10 could be seen. Movement may be restricted in the 3.10-3.22 region for some time now. Near term is positive while within an overall long term downtrend.

FOREX
The focus on QE in the Eurozone keeps the pressure on the Majors against Dollar unabated. But most of the EM currencies actually strengthened up a bit against Dollar, albeit without any momentum. Rupee may follow the EM cue and try to appreciate.

Euro (1.3166) was sold off exactly from our resistance at 1.3220 and touched our immediate target at 1.3150. The bears keep their domination intact as the medium term target of 1.31 looks very close now.

Dollar-Yen (104.03) is consolidating at the higher levels but the rally may not be over yet as long as the price stays above 103. The grinding price action without any kind of directional move in Euro-Yen (136.97) actually shows the relative uniformity between Euro & Yen as both weakened simultaneously. The pair remains weak below 138 and the range of 136-138 may sustain for a few sessions more.

Pound (1.6552) is stuck within a 50 pips range for the last 4 sessions and a break above 1.66 may produce a corrective rally to 1.6650-1.6700 with the major downtrend still in force.

Aussie (0.9312) is trading in the range of 0.9230-0.9350 for the third week now and this range shows no sign of breaking immediately.

Dollar-Rupee (60.43) has failed to break above our resistance 60.65-70 in the last two days and that increases the bearish pressure on the pair. A break of 60.37-35 opens up the door to 60.00-59.85.

INTEREST RATES
Important Supports, Resistances being tested on some key interest rate variables. Watch carefully. Could generate near-term turnarounds in the market.

Further decline in the Germany-US 2Yr Spread (-0.55%) to just below the support mentioned yesterday, leading to more Euro weakness (1.3165). A test of -0.60% is very likely now. We may get a small bounce back towards -0.50% or even -0.40% from there. Watch for that.

An unusual divergence is being seen between Dollar-Yen (104.02) which is rising and the US-Japan 10Yr spread (1.89%) over the last two months. That said, there is good Support near 1.85-83% on the Spread which may well hold in the longer term, to possibly produce a bounce towards 2.0%.

The US 2Yr Swap Cost (0.1983%) has come off from important Resistance near 0.25%. If it doesn't bounce from current levels, it will be in danger of falling further towards 0.15% before interest arises again to buy floating-to-fixed swaps. Perhaps the market expects the US 2Yr Yield (0.52%) to find Resistance near 0.53%, as mentioned yesterday.

The 10Yr GOI (8.5551%) dipped a wee bit yesterday. As mentioned yesterday, the overall trend remains down, with good Resistance near 8.60-65%.

DATA TODAY

No major data release today.

DATA YESTERDAY

US Durable Goods Orders
...Expected 7.40 % ...Previous 2.73 % ...Actual 22.58 %

US Case Schiller
...Expected 8.20 % ...Previous 9.37 % ...Actual 8.08 %

US Cons Conf
...Expected 89.10 ...Previous 90.30 ...Actual 92.4