Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
0853 IST or 0323 GMT or 2323 EST
Major signs of weakness abound. Possibility of near term tops in the major indices. Another day of sustained decline may confirm the bearish scenario.
Dow (17830.76, -1.17%) has been hurt by a weaker than expected growth data and now shows the initial signs of an extended pullback to 17500-400. If the correction fails to hal by 17400, the much deeper levels of 17200 or even 16800 will come into consideration.
Dax (10321.15, +0.21%) tested and bounced from a very significant support of 10100. Protecting the gains will be difficult if Dow remains weak and a break below 10100 may weaken the index significantly.
Shanghai (2945.08, -0.02%) remains in a comatose state in the range of 2900-2980 as expected. A breakout may emerge next week, triggering a directional move.
As Japanese markets are closed for the day, Nikkei (16666.05, -3.61%) has ended the week and not a in a good state. The break below 17100 may drag it down further to 16200 or even 15500 in the coming days.
Nifty (7847.25, -1.66%) faced the strongest rejection from our resistance of 7980-8000 in a quite a while. The chances of a near term top at place are stronger now with possible immediate downside targets coming at 7835-20 and then 7770. Below 7770, it may be a different ball game altogether, opening up 7500.
Severe weakness in Dollar Index (93.49) has helped all the commodities. Any risk-off approach may make the precious metals more glittering to the fleeing smart money.
Both Brent (48.01) and WTI (46.02) is banking on the weakness of Dollar to extend their rallies. Bren has already achieved our target of 48.00 and the immediate upside may be capped to 49.00-50, limiting the near term upside to 46.50-47.00 for WTI. The Brent-WTI spread (1.99) is closing in towards the major resistance around 3.00. Check the daily charts here - http://kshitij.com/graph-gallery/commodities/brent-crude/candles/Daily andhttp://kshitij.com/graph-gallery/commodities/wti/candles/Daily
Just like Crude, Gold (1276.10) is set to end the month at the highest levels but it is difficult to say if it is ready to break above the strong resistance band of 1285-1305. Gold must stay above 1270 to extend the rally and it may find help if the equities see any major outflows. Silver (17.77) spiked to a new high too, registering a new 12-month high and may target the 2015 high of 18.47 now.
Copper (2.251) tested and bounced sharply from our support of 2.20 as expected. Still, it needs a break above the resistance of 2.30 to open up the higher targets around 2.50. Check the weekly chart here - http://kshitij.com/graph-gallery/commodities/copper/candles/Weekly
Currencies are all mixed. Dollar-Yen is trading near support levels. Euro and Pound may test resistance levels in the next couple of sessions while Aussie and Rupee looks ranged for some time.
Dollar-Yen (107.31) came down to test levels near 107 as expected. Need to see if it is able to bounce back towards 109-110 or extend its fall towards 106-105. See chart:
Euro (1.1381) seems to have picked up some rising momentum and may get some rejection near 1.14. Thereafter, it may see another sharp corrective dip to 1.11-1.12 before re-testing 1.14-1.15 again. See chart:
Pound (1.4641) has also moved up to test resistance near 1.47 and if that holds we may see a short corrective dip to 1.45 before resuming the rally. A break above 1.47 could initiate a strong rally in the longer term. See chart:
Aussie (0.7643) bounced back from levels near 0.7550 and while that holds, we may see some movement in the 0.755-0.775 region. See chart:http://kshitij.com/graph-gallery/currencies/audusd/candles/Weekly
Dollar-Rupee (66.52) may continue to trade in the 66.40-66.60 today. Overall the broad 66.10-66.80 region remains the major region of trade in the coming sessions.
Overall yields are mixed. US and German yields looks bullish while there could be some pause in the UK yields. Japanese yields continue to fall.
The UK yields have come up to test resistance levels but we may see some downward correction if this holds along with a fall in Pound. The 5Yr (0.976%), 10Yr (1.60%) and the 20Yr (2.289%) are trading higher from previous levels of 0.96%, 1.57% and 2.26% respectively. See chart:
The Japanese yields are all trading in the negative except the 30Yr (0.354%) which is sharply heading to get into the negative territory too. See chart:
The US-Japan 10Yr spread (1.91%) has come off from resistance as expected as Yen strengthened yesterday after the BOJ. While the yield spread moves lower the currency may strengthen further in the medium term. See chart:
23:05 GMT or 4:35 IST UK Cons Conf
...Expected -1 ...Previous 0
1:30 GMT or 7:00 IST AU PPI
...Expected 0.2 % ...Previous 0.3 % ...Actual -0.2 %
9:00 GMT or 14:30 IST EU Unemp
...Expected 10.3 % ...Previous 10.3 %
12:30 GMT or 18:00 IST US Personal Income
...Expected 0.30 % ...Previous 0.15 %
12:30 GMT or 18:00 IST US PCE Price Index M/M
...Expected 0.20 % ...Previous 0.09 %
12:30 GMT or 18:00 IST CA GDP
...Previous 0.6 %
...Expected -0.1 % ...Previous-0.1 % ...Actual -0.1 %
EU Biz Climate
...Previous 103.0 ...Expected 103.5 ...Actual 103.9
...Expected 0.7 % ...Previous 1.4 % ...Actual 0.5 %
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