Market Morning Briefing

GOOD MORNING!

EQUITIES
The Dow (16268.99, -0.60%) is stuck in the 500 points band of 16000-16500 for the 6th week now. A retest of 16000 may be on the cards now but this sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.

The Shanghai (2049.82, -0.67%) has failed to break above our 2080-85 levels and subsequently has come down. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only. Interestingly, it is not falling anymore nowadays on the bad Chinese data and all the hoopla about it entering a new bear market. This actually invites the suspicion if the already established 6 year long bear market is coming to a close.

The Dax (9448.58, +1.18%) is testing the higher end of our resistance zone of 9400-9460. A successful break above 9460 may take it to 9700-9900 but we will keep note of the interim supply zone of 9600-9650. Right now it is looking like one of the stronger markets.

Nikkei (14308.69, -1.16%) is consolidating in the range of 14200-14700 but the downtrend remains in force till 14700-800. We look for a break of 14200 to confirm the bearish momentum.

Nifty (6601.40, +0.18%) made a high at 6627, close to our initial target level of 6650. A failure to make a new high today may be the initial sign of weakness and the early signal of a short term top. We will keep watching the support of 6570 and 6540 if weakness sets in.

COMMODITIES
Gold (1304.53) has come off from crucial resistance and is targeting 1300-1295 for now. A break below 1295 could push prices further to 1285-1274 levels. Gold-Silver ratio (66.02) has risen in line with our expectation targeting crucial resistance near 66.35-66.5 from where it could come off to 63.74. This indicates upcoming sharp fall in Gold.

Silver (19.75) is testing crucial support near 19.67 but if it unable to bounce from here it could fall to 19.5-19.42 from where we may expect a bounce back to 20.5 eventually.

Copper (2.9800) is still trading near crucial resistance at 3 and is unable to decide its further direction. A rise to 3.15-3.25 may be ensured if it sustains above 3 else we could see 2.90 on the downside.

Brent (107.02) is trying to eventually rise towards 108 but its pace seems slower with high fluctuation.
Nymex WTI (100.38) has risen breaking 100. Need to keep an eye if it sustains above this level as it may indicate a sharp up move towards 103-107 in the near term. But while below 100.5, movements may be restricted within 100.5-97 levels.

CURRENCIES
Dollar Index (79.99) is consolidating in a Triangular pattern but remains firmly on course to its way to 80.50-75 after this correction ends. Staying above 79.70-65, the strength remains intact.

The Euro (1.3788) remains weak as it is yet to break above 1.3885-95 to negate the downtrend. The bearish momentum may intensify on a break below 1.3750.

Dollar-Yen (101.88) holds above 101 to maintain the broader range of 101-104. The sideways action in this range may continue for some more time before a decisive move emerges.

The Euro-Yen Cross (140.48) is testing the lower end of the narrow range of 140.40-142 and a firm break will bring the initial sign of weakness. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131.

Pound (1.6583) may have finished the correction to resume the medium term uptrend. Now a rise to 1.6650-1.67 may be expected with the major support unchanged at 1.6450.

Aussie (0.9235) have broken above 0.92 to signal a medium term rise to 0.9380-0.94. Any correction now should be limited to 0.9150-0.91.

Dollar-Rupee (60.14) has made a low at 60.06 in line with our expectation but no sign of buying has emerged yet. Any bounce may be limited to 60.50 now and the fall may extend to 59.70-50 below 60.

INTEREST RATES
Both the US 10Yr (2.70%) and the 5Yr (1.70%) came off from their resistances suggesting a further drop towards 2.50% and 1.60% respectively. The 30 Yr (3.55%) also saw a drop, flattening the yield curve further.

The German 10Yr (1.57%) remained unchanged. Below 1.60% we may see 1.50%. The German – US 2Yr spread (-0.26%) has also remained unchanged and is testing the support at current levels. A bounce from here and we can expect it to go up to -0.20%.

The Japan 10Yr (0.63%) has risen and is near the upper limit of our range of 0.55% - 0.65%. A break beyond this range will give further direction. The US-Japan 10Yr spread (2.07%) saw a fall and may test the support near 2.05%.

The Indian 10Yr GOI (8.78%) remained stable in the range of 8.75% - 8.85%. A break beyond this range will give us further direction. All eyes are on the RBI Meeting next week.

DATA TODAY

12:30 GMT or 18:00 IST US GDP
...Expected 2.70 % ...Previous 2.40 %

DATA YESTERDAY

US Durable Goods Orders
...Expected 1.10 % ...Previous -1.29 % ...Actual 2.23 %