Market Morning Briefing

GOOD MORNING!

STOCKS
Mostly a consolidation day for the indices after the sharp rallies. The Chinese Q3 GDP is to be released today and may set the mood for the Asian markets.

The Dow (16399.67, +0.12%) had a consolidation day after the large gain of Friday increasing the chance of 15850 being a medium term bottom. Now it has to break above 16600-800 to signal a rally towards a new life high. Dax (8717.76, -1.50%) is struggling near the strong resistance of 8900 and while the index may expect support from 8600-550, it must break above 8900 to overcome the weakness and extend the rally.

Shanghai (2357.28, +0.02%) is in a pause mode as expected after correcting from 2390 and may continue for a few more sessions. Bullish momentum remains strong above the support area of 2315-2290. The Nikkei (15024.01, -0.58%) is consolidating after bouncing sharply almost exactly from our support area of 14600-550. While it remains in the broader range of 14500-16500, it has tackle supply pressure anywhere from 15200 to 15600.

Nifty (7879.40, +1.28%) opened with a huge gap up expectedly but failed to break above 7925, keeping the bearish possibilities alive. As mentioned again and again, it is tough to be bullish in the medium term until 7925 & 7975 is firmly broken above.

COMMODITIES
Gold (1245.85) and Silver (17.374) have been quiet yesterday. Gold is trading near 1245 and seems to have paused there since the last 2-sessions but may test resistance near 1250 ; while Silver may continue to range in the 17.25-17.75 zone for a few more sessions. Gold-Silver ratio (71.648) has been sharply rising and may target 72-74 levels in the near term indicating a rise in Gold against Silver.

Nymex WTI (82.65) is unable to break above the resistance near 84 on the upside and if this continues we may see either a sideways movement in the 80-84 region or a fall towards 80-77 levels in the near term. Any strong signal of a bullish signal is yet to come but we may expect a bottom near 80-77 levels before a sharp rise is seen. For now it is in a perfect down channel.

Brent (85.46) is held well below resistance near 88 and while this holds we cannot negate a fall towards 82 in the near term. Near term may be stable. Brent-WTI spread (3.00) is testing support near current levels but may remain ranged sideways for sometime.

Copper (2.9920) is highly fluctuating in the 2.95-3.03 levels. While 2.95 holds we may see sideways consolidation but a break below 2.95 can push it sharply down. Near term is bearish.

FOREX
The Major Currencies look just a bit stronger against the Dollar today and that implies a longer duration for the corrective phase. The Indian market may see lesser volatility in this shortened week.
Euro (1.2804) is rangebound within 1.27-1.29 for the last few sessions but the lack of downward momentum even after the failure to break above 1.29 gives birth to the possibility of extending this corrective bounce to 1.2950-1.30 levels, while the long term trend remains bearish.

Dollar-Yen (107.24) bounced just as expected but now may take a pause or correct a bit near the supply zone of 107.50-108.25. The Euro-Yen Cross (136.66) has broken above 136.60 to signal an extension of the bounce to 137.50-138.25 and the weekly Bullish Hammer candle may provide a boost.
Pound (1.6165) has made the initial bounce from 1.5900-1.5850 as expected and now may try to extend it to the intermediate resistance of 1.6200-25. The series of lower highs must be broken first before considering any strength.

Aussie (0.8802) remains in the sideways corrective mode, looking like Diamond pattern, suggesting a lot of contraction of volatility. A break of the range 0.8650-0.8900 is required to produce a trending move.

Dollar-Rupee (61.37) held above 61.15-10 yesterday to recover some of the loss but the near term remains weak as long as the pair remains below the resistance area of 61.55-65 and the possibility of testing the lower end of the broader range of 60.90-61.90 stays alive.

INTEREST RATES
Danger of lower yields remains in USA and Europe. Both are seeing overall Curve-flattening while Japan is seeing the Curve steepen.

Resistance at 2.25% holding well on the US 10Yr (2.17%). The 30Yr (2.95%) has also dipped a bit from 2.99% the day before. The 5Yr (1.39%) and 2Yr (0.35%) have also come off slightly from 1.43% and 1.39% the day before. As mentioned yesterday, longer term danger of lower yields remains. The Curve as whole is likely to resume its flattening over the coming days.

Curve flattening is seen in Germany as well. The German 10Yr (0.843%) may soon see an accelaration of its overall downtrend while it remains below 0.95%. On the other hand, the German 2Yr (-0.0645%) has good Support at -0.10% and may either range sideways or try to move up a bit towards -0.02%.

The German-US 10Yr Spread (-1.32%) has risen well over the last two weeks but may dip towards -1.40% again while below good Resistance at -1.25%. The German-US 2yr Spread (-0.42%) has also come off well from earlier high near -0.35% seen last week. The Dollar could regain some of its yield advantage against the Euro in the coming days.

Japan is seeing Curve steepening, though. The 30-10Yr Spread (1.15%) and the 30-5Yr Spread (1.51%) are both moving up a bit as the 30Yr (1.631%) seems to be inching up towards 1.70% in the medium term.

Indian 10Yr GOI (8.36%) remains below 8.40% and should be in line to test 8.30%.

DATA TODAY

14:00 GMT or 19:30 IST US Existing Home Sales
...Expected 5110 K ...Previous 5050 K

2:00 GMT or 7:30 IST CN GDP (YoY)
...Expected 7.2 % ...Previous 7.5 % ...Actual 7.3 %

5:30 GMT or 11:00 IST CN Retail Sales
...Expected 11.80 % ...Previous 11.90 % ...Actual 11.60 %

5:30 GMT or 11:00 IST CN Ind Prodn
...Expected 7.5 ...Previous 6.9 ...Actual 8.0


DATA YESTERDAY

EU EA (17) Curr Acct Bal
...Previous 21.6 EUR Bln ...Expected 21.3 EUR Bln ...Actual 18.90 EUR Bln