GOOD MORNING! STOCKS
Equities are in green gloablly over yesterday and today, supporting our overall relatively bullish outlook for the Dow and the Dax.
The mentioned Support at 18000 held well on the Dow (18162.99, +0.67%, +121.45) yesterday and the market could be gearing up for a rise.
The Dax (11771, +1.26%) too trades higher, refusing to fall to 11400 so far. Dips to 11400, if seen, might get bought well.
The Nikkei (20611, +0.68%) has met our first target of 20600 and might move further up to 20700-800 as well. Beware of profit-taking near those levels. The Shanghai (4911, -0.61%) is off a decent bit from intra-day high of 4986.50 today. We remain scared of being Long the Shanghai.
The Nifty (8334.60, -0.1%) closed flattish yesterday. Importantly, the intra-day dip to 8278 did not trigger follow-through selling. So, the picture remains mixed on the Nikkei.
Overall commodities are down but are trading above support levels which may help them to see some upward correction next week.
Gold (1188.34) bounced back after making an intra-day low of 1183.56, in line with the levels mentioned yesterday. It has tested support levels on the candle charts and may now move up towards 1190-1200 in the coming sessions. However, a break below 1183 is not negated for now. See charts: http://www.kshitij.com/graphgallery/goldcandle.shtml#candle
Silver (16.71) is trading above support near 16.50 and has a fair chance of testing it before bouncing back. Again to 17.00 and above. On a longer term, price is bearish while below 18.00. Look charts at: http://www.kshitij.com/graphgallery/silvercandle.shtml#candle
WTI Crude (57.32) and Brent (62.54) are falling an look bearish in the near term. Brent seems to be falling at a faster pace and it has made an intra-day low of 61.96 (just above our mentioned 61.83) yesterday. WTI may test lower levels of 56-54 in the near term while Brent may come down to support near 60. See chart: http://www.kshitij.com/graphgallery/brentcrudecandle.shtml#candle
Brent-WTI spread (4.74) has fallen sharply breaking below 5 faster than expected. It may test 4.50-4.00 before a short upward correction. See chart: http://www.kshitij.com/graphgallery/brentvsnymexcrude.shtml
Copper (2.7725) is trading above support near 2.75 and while that holds, we may see a upward correction towards 2.80-2.84. See chart: http://www.kshitij.com/graphgallery/coppercandle.shtml#candle
Yesterday we had said that the non-Dollar currencies may have Supports nearby. This has been true only for the Euro, not the other currencies. The Yen has weakened sharply. The Dollar is still relatively very strong, despite US yields coming down a bit.
The Euro (1.0905) dipped to a low of 1.0819 and has rebounded from there, trading stronger than yesterday. But it will have to rise past 1.0935 in order to gather some more meaningful strength.
But, the Pound (1.5354) remains weak, although it is up a little from a low of 1.5300, and can target 1.53 while below 1.5375. The Aussie too had bounced during the day yesterday (0.7690) but has fallen sharply in the last few hours on weaker than expected private capital expenditure data. It has important Support coming up at 0.7650 today.
Dollar-Yen (124.14) has weakened substantially, coming up to levels last seen in June 2007, breaking above the multi-year resistance near 123 mentioned over the last couple of days. The immediate upmove is strong with Support at 123.50. Further rise cannot be ruled out. There is further room towards 136.00 on the upside for the Euro-Yen (135.25) as well.
Dollar-Rupee had closed at 64.01 Onshore yesterday. It is quoting near 63.95 Offshore just now. Watch Support at 63.80-70.
Overall yields continue to remain bearish in the near term.
The US bond yields are down. The 10Yr (2.13%) and 30Yr (2.87%) are down from .2.15% and 2.90% respectively. The 10-5Yr differential (0.60%) is down and may test 0.58-0.55% soon. The 30-10YR (0.74%) and 30-5Yr (1.33%) are have also fallen and may continue in the near term. See charts: http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff
The German yields are also down. The 10Yr (0.54%) and 30Yr (1.15%) are trading lower by 1bps. See charts: http://www.kshitij.com/graphgallery/eursin00.shtml#sin00
The German-US 2Yr Spread (-0.88%) is stable while the German-US 10Yr Spread (-1.59%) has moved down. See chart: http://www.kshitij.com/graphgallery/eurusddiff.shtml#eurusd
Apart from Germany, France 10Yr (0.839%), Greece 10Yr (11.33%), Italy 10Yr (1.85%) and Spanish 10Yr (1.80%) are all trading lower from 0.85%, 11.58%, 1.94% and 1.86% respectively.
The UK Gilts have risen by 1bps. The yields remain choppy for now fluctuating between highs and lows.. See chart: http://www.kshitij.com/graphgallery/gbpsin00.shtml#sin00
The UK 10-5YR (0.47%) is stable but looks bearish in the near term. See chart: http://www.kshitij.com/graphgallery/gbpdiff.shtml#sindiff
8:30 GMT or 14:00 IST UK GDP
...Expected 0.40 % ...Previous 0.38 %
...Expected 0.75 % ...Previous 0.75 % ...Actual 0.75 %