Market Morning Briefing

GOOD MORNING!

STOCKS
The Dow looks surer of a rise than most other Indices which are seeing profit-taking. The Nifty can still gratify with a bounce if the Support at 8350 continues to hold.

US New Home Sales (+481K) came in much lower than the expected +514K, casting doubt on its earlier rise. Further decline from here would erase one of the brighter spots in the US economy. Take a look at
http://www.kshitij.com/fundamentals/funcharts/usnewhomesales.shtml

The Dow (18058.69, +0.11%, +20.42) traded narrow yesterday. Still looks bullish for an eventual rise towards 18500. Support that needs to hold is 17800. A weaker than expected US Durable Goods today (expectation is +0.7% M/m) may help the Dow move higher, as ironical as that might be.

Continued profit-taking in the Dax (11723, -1.21%, -143.79) in line with expectation, with the fresh strength in the Euro (1.0805) being a possible trigger. We are targeting 11400 while below 12200.

Contrary to expectation, the Nikkei (20030, -0.78%, -157.5) failed to break above the 20200 Resistance and is now close to testing the alternative bearish target of 20000. Still, the longer term trend remains bullish while above 19800-400. 

Good fall in the Shanghai (4369, 1,07%, -47) in line with our warning of profit-taking ahead of Resistance at 4400-500. Remember this market has gone up some 91% since Oct-2014 and 120% since Apr-2014. Profit-taking is warranted. Fresh Longs are avoidable. A break below 4200, if seen, could cause a lot of pain to Bulls.

The Nifty (8398, -0.4%, -31) disappointed yesterday by failing to sustain its bounce the day before. But, crucial Support at 8350 is holding as of now. The chances of a strong bounce are still there while the Support holds. But, there can be trouble if the Support breaks.

COMMODITIES
Gold (1192.76) continues ping pong between 1181-1191-1211. Gold's inability to break above 100-day MA (1211) should worry bulls. Gold is also below its resistance trendlines (see chart). Longer term bulls are under threat, and will be as long as Gold trades below 200-day MA at 1225.

See Gold Chart here: http://www.kshitij.com/graphgallery/goldcandle.shtml#candle

Silver (15.86) remains subdued below 16 but above its crucial support zone 15.75-15.45. The downtrend from early April is still in play. As mentioned yesterday, Silver could continue to test 15.75-15.45 support for few more days.

Both WTI Crude (57.49) and Brent Crude (64.55) popped up to reach its targets at 58.50 and 65 respectively. The next targets are $60 on WTI and $67.30 for Brent. The trend remains encouragingly bullish. Trend invalidation levels for WTI is raised to $55 and Brent's is at 62.50. 

Caution is well advised in buying Copper (2.6915) as its fate hangs in balance over these support trendline tests. Though bulls have shorter term supports, the long-term weekly resistances are also holding well. We have to wait and watch how the trendline fares.

See related Copper charts here: http://www.kshitij.com/graphgallery/coppercandle.shtml#candleand here http://www.kshitij.com/graphgallery/copperma.shtml#ma

FOREX
Pound, Dollar-Rupee, Dollar-Yen ,Aussie and Euro are up but have near term resistances coming up. 

Pound (1.5031) is trading within the 1.51-1.50 region. Need to keep an eye for a break above 1.51 which would initiate a fresh upmove. Important resistances are 1.5100 and then 1.5174 which may hold well for now. 

Euro (1.0808) rose sharply yesterday but note that there is a near term resistance at 1.08725 and while below that there are chances of seeing some fall to 1.0724. Market awaits the German IFO data today. 

EURGBP (0.7186) rose from support near 0.71130 as mentioned yesterday. But it may trade within 0.7206-0.7113 for a couple of sessions before bouncing up further. EURINR (68.391) and EURJPY (129.09) are also trading higher. 

USDJPY (119.52) and has bounced from channel support near 119.40 on the daily charts and may trade in the 120.36-120.0 in the near term. 

Aussie (0.777) has also bounced up from support near 0.7707 but is trading below 0.7815-0.7830 which is an immediate resistance zone on the upside. 

Dollar-Rupee (63.32) has indeed risen above 63.15 to close at 63.3 as mentioned yesterday. We now negate the immediate fall to 62.75-62.50 and look for a rise towards 63.50.

INTEREST RATES
The US yields have come down slightly after a bad New home sales data yesterday. The 5Yr (1.37%), 10Yr (1.96%) and 30 Yr (2.65%) are down 1-2 bps. The 10-5 YR spread (0.58%) is testing resistance near current levels and if that holds we may see a fall towards 0.55% also resulting in a fall in the 10Yr yields against our expectation of a move towards 2.00%.

The German yields are almost stable but the 30Yr (0.57%) has gone up 3bps. The German-Yen 10YR yield spread (-0.05%) is moving higher towards resistance near -0.03% while the US-German 2Yr spread (-0.80%) remains stable. 

The UK Gilts are trading low. The 5Yr (1.2890%), 10YR (1.6875%) and 20Yr (2.2495%) are all down from 1.2960%, 1.6955% and 2.2645% respectively. 

The Indian 10Yr GOI (7.757%) is expected to trade in a broad 7.70-7.80% in the near term. 

DATA TODAY

9:00 GMT or 14:30 IST GER IFO Business Climate 
...Expected 108.4 ...Previous 107.9 

9:00 GMT or 14:30 IST GER IFO Business Situations 
...Expected 112.4 ...Previous 112.0 

9:00 GMT or 14:30 IST GER IFO Business Expectations 
...Expected 104.5 ...Previous 103.9 

12:30 GMT or 18:00 IST US Durable Goods Orders 
...Expected 0.70 % ...Previous -1.42 %


DATA YESTERDAY:-
US New Home Sales 
...Expected 514 K ...Previous 543 K ...Actual 481 K