Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
Overall trend bullish for Equities globally. But, some near-term profit-taking in Nikkei, Shanghai. Daxtoo could be vulnerable to some profit-taking.
Buyers rode into the Dow (18288.63, +0.86%, +155.93) without waiting for a dip, as they got over their near-term fatigue to catch up/ lead the rest of the world. The market closed at the day's high and is likely to test important near-term Resistance near 18400-500 soon. Some profit-taking/ consolidation may be expected there.
Dax (11410.36, +0.08%, +8.7) has seen a solid rise from 9383 (06-Jan). Now it needs to see follow-through buying at current levels for further exponential rise towards 11700+. Else, there could be chances of consolidation/ profit-taking down towards 11000.
Nikkei (18820, -0.04%, -6.91) has tested our target of 18900 and is hesitating to cross that. Dollar-Yen(119.78) has also come off slightly from a high of 120.26 just below our target resistance at 120.35. Keep an eye on this. A break below 18800 can lead to near-term dip to more crucial Support at 18600.
Shanghai (3297, -1.15, -39) is down sharply today, well ahead of the crucial make/ break Resistance in the 3375-3400. This is despite the rate cuts in China. May see near-term dip towards 3275-50 before another wave to the upside towards 3375-3400.
The Nifty (8956.75) closed strong yesterday and may well rise towards 9000-9100 in the coming days.
COMMODITIES
Copper (2.6650) tested the Weekly resistance near 2.718 and the 21-day MA as expected before coming off from there. See chart: http://www.kshitij.com/graphgallery/coppercandle.shtml#candle
While above 2.65 we may see some consolidation in the 2.65-2.70 range but a break below 2.65 may take it to previous levels of 2.55. Near term is bearish.
Movement has narrowed in Brent (60.21) as it continues to move up steadily along the support on the daily charts. See chart: http://www.kshitij.com/graphgallery/brentcrudecandle.shtml#candle
63-64 levels are crucial and may be very difficult to break on the upside. Range of 58.65-63 may remain intact for the next couple of sessions. Nymex WTI (49.85) on the other hand is also moving along the daily support channel like the Brent.
Gold (Spot 1201.10) rose yesterday after bouncing from daily channel support above 1200 but has been pushed back by the 21-day MA near 1223.3. It is currently trading lower in the range of 1190-1220 mentioned on our earlier comments. It is currently in a crucial range and a break below 1190 may take it to 1175 in the near term.
Silver (Spot 16.29) has also fallen sharply and may test the channel support on the daily near 15.75-16 which if holds may trade above 16 for a few sessions before deciding further movement. Oversll the long term trend is down.
FOREX
Overall Dollar strength still in place. Watch Pound and Yen for potential gains. Euro and Aussie look particularly weak. Dollar-Rupee stable.
The Euro (1.1192) appears poised for a decline towards 1.1045 in a few days. A break below 1.1114 needed to confirm. Resistances on the upside are 1.1270 and 1.1340. Further profit-taking in Dollar-Yen could work against it as the Euro-Yen (134.00) could also be dragged lower.
Dollar-Yen (119.75) rose to 120.26, just below our Resistance at 120.35, and is coming off from there. Possibly, we may see a dip back towards 119.00-118.70 which could possibly morph into a deeper decline later. A fresh rise/ break above 120.35, if seen, would be very bullish, but the chances of that are lower.
The Pound (1.5373) is seeing mild profit-taking within an overall uptrend that has good Support at 1.5335-15. A fresh rise past 1.55 may take some time though. It looks potentially the strongest among all the non-Dollar currencies.
The Aussie (0.7770) remains in a tight downtrend that can target 0.76 and even 0.75 while below 0.79. But, a break below 0.7710 is needed to bring in more stop loss selling.
Dollar-Rupee (61.87) may remain quiet between 61.70-62.10 today.
INTEREST RATES
US Bond yields have risen again today after seeing a dip yesterday. Near term may see some fluctuation but overall a short downmove may be expected in the coming weeks. The 10Yr yield (2.07%) is within our expected range of 1.80-2.30% and may remain so for some more time.
The Japanese yields are almost stable. The 30Yr (1.37%) has paused after falling sharply from 1.495% but there is still room on the downside to support near 1.2%. The 10Yr (0.25%) is just below resistance near 0.30% and may move down in the near term. Overall the Japanese yields are bearish in the near term.
German yields have risen yesterday after the EURUSD (1.1191) moved up slightly. The yields are mixed and may fluctuate in the near term. Curve flattening is visible and overall the yields may move downwards in the longer term. The 10Yr yield (0.36%) has moved up from 0.33% yesterday but may remain stable for the next few sessions.
The 10Yr GOI (7.7421%) has moved up to the upper end of our range of 7.65-7.75% and may now test resistance at 7.75% to remain ranged for a few sessions below 7.75%. Note that there is sharp movement in the yield and if it breaks above 7.75%, it may move higher towards 7.81% in the medium term.
DATA TODAY
4:30 GMT or 10:00 IST RBA Meeting
...Expected 2.00 % ...Previous 2.25 %
6:45 GMT or 12:15 IST CH GDP
...Expected 0.30 % ...Previous 0.63 %
12:30 GMT or 18:00 IST CA GDP
...Expected 0.10 % ...Previous -0.20 %
DATA YESTERDAY:-
AU PMI
...Previous 49.0 ...Actual 45.4
JP PMI
...Expected 51.5 ...Previous 51.5 ...Actual 51.6
CN PMI
...Expected 50.10 ...Previous 49.70 ...Actual 50.7
IN PMI
...Previous 52.90 ...Actual 51.20
CH PMI
...Expected 47.4 ...Previous 48.2 ...Actual 47.3
EU PMI
...Expected 51.1 ...Previous 51.0 ...Actual 51.0
UK PMI
...Expected 53.50 ...Previous 53.10 ...Actual 54.10
EU Unemp
...Expected 11.40 % ...Previous 11.30 % ...Actual 11.20 %
US Personal Income
...Expected 0.4 % ...Previous 0.30 % ...Actual 0.34 %
US PCE Price Index M/M
...Expected 0.0 % ...Previous -0.3 % ...Actual -0.2 %
US Manufacturing ISM
...Expected 53.4 ...Previous 53.5 ...Actual 52.9
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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