Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
Uptrend intact in almost all the indices but a bit of fatigue is visible with loss of gain at the higher levels. Today/tomorrow may be the confirmation or negation day for Short term tops for a number of indices.
Dow (17279.74, +0.08%) hit yet another new life high at 17350 but created a Shooting Star candle with bearish implications. A down candle on Monday would signal a short term correction towards 17000 before the rally resumes. Dax (9799.26, +0.01%) hit about 9900 before losing all the gains just like the US index. The bulls must protect 9700-600 to prevent any extended correction.
Shanghai (2304.97, -1.05%) is not feeling the effect of the Chinese stimulus yet as it continues the correction. Confirmation is needed to conclude that the corrective phase is over. Expect support from 2285-70. The Nikkei (16189.42, -0.81%) is correcting like the other indices after hitting 16364, a level last seen in October 2007. Expect support from 15900.
Global cues suggest that Nifty (8121.45, +0.08%) may correct the sharp rally from 7940 to 8160 today. Our old support area of 8050-25 becomes relevant one again to keep the structure strong. Only below 8050-25 the bearish options would be considered.
COMMODITIES
Gold (1213.29) has fallen further below 1220 and is strongly headed towards crucial 1200.Keep an eye on 1200 as we may see a bounce from there towards 1225-1250 levels. However, failure to bounce from 1200 may lead to a danger of falling to 1180. Near term is bearish.
Silver (17.528) has dropped sharply to support near 17.5 as Dollar strengthened. Need to keep an eye on this as there may be a bounce from current levels towards 18.5.
Nymex WTI (92.41) has been falling for a couple of sessions now coming off from resistance near 95 as expected, indicating the dominance of the bears in the longer run. We may see some sideways movement in the broad 90-95 region for some time now.
Brent (97.94) is highly fluctuating in the 96-100 region, well held below the 21-day MA and while this holds we may see ranged moves above 96. Difficulty to break above crucial levels of 99.6-100-101 persists. Clarity can only be determined on a break on either side of the range.
Copper (3.0585) is testing support near current levels but at the same time the bulls doesn’t seem to be strong enough right now. The range of 3.05-3.20 to hold for some more sessions. Near term is bearish.
FOREX
The possibility of Dollar (84.56) pullback was discussed last week, right at the top. It looks more probable now, pending a break below 84.25. A bounce in some of the majors can’t be ruled out now.
Euro (1.2863) is showing very marginal signs of making a bottom near 1.2825-2800 with the severe decrease in bearish momentum despite the new lows. Though a break above 1.2930 and then 1.30 is immediately required to make even the smallest dent on the bearish fort. Keep watching for any sudden short covering emerging.
Dollar-Yen (108.69) is correcting its overstretched state as expected and a pullback till 107 would be very normal. The Euro-Yen Cross (139.83) faced a sharp rejection exactly from our resistance of 141.25 and with Yen regaining some strength, may correct to 139.00-138.50 now.
The Pound (1.6356) is showing immense volatility just as expected and discussed multiple times. Our 1.6550 has turned out to be the cap of the current bounce and may well become the top end of the short term range the currency is making.
Aussie (0.8946) has entered our target/support band of 0.8920-0.8890 but without a slowdown visible in the bearish momentum, nothing looks very promising for the bulls yet. Still, if 0.8920-0.8890 remains protected, expect the pause to extend both price and timewise.
Dollar-Rupee (60.8150) remains weak below 61.00 and 61.20. A Bear Flag is seen and a break below 60.80-78 would activate the targets of 60.60 and 60.30.
INTEREST RATES
The US 5Yr (1.79%), US 10Yr (2.56%) and the 30-Yr (3.26%) have sharply declined from 1.82%, 2.58% and 3.29% respectively. The 30Yr may be seen rising the most while the 5Yr and 10Yr are testing support near current levels and may soon bounce in the near term.
The German 2Yr (-0.071%) and 5Yr (0.19%) are stable for now while the 30-Yr (1.941%) has fallen a bit from 1.949%. The 30-Yr yield may fall against the 10Yr (1.04%) and the 5 Yr (0.19%) in the near term. The German 10-2 Yr (1.11%) has fallen as expected and may see 1.10-1.09% levels from where we may again see a short term bounce.
The Indian 10Yr (8.46%) is near crucial levels of 8.50-8.45%. A failure to bounce from these levels may take it lower to 8.00-7.75% in the mid-term. The Indo-US 10 Yr (5.88%) has risen a bit but if the rise does not continue, a fall towards 5.80-5.75% can be expected in the near term.
DATA TODAY
14:00 GMT or 19:30 IST US Existing Home Sales
...Expected 5210 K ...Previous 5150 K
FRIDAY'S DATA:-
EU EA (17) Curr Acct Bal
...Previous 24.80 EUR Bln ...Actual 32.30 EUR Bln
CA Inflation Y/Y
...Previous 1.70 % ...Expected 1.80 % ...Actual 2.10 %
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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