STOCKS
News on the possibility of a delay in the US-China trade deal getting signed is weighing on the equities now. Dow and Nikkei remains below their crucial resistance level which if continues to hold can trigger a corrective fall in the coming days. DAX has room on the upside to test a key intermediate resistance. Shanghai looks mixed. Sensex and Nifty can consolidate sideways for some time.
Dow (27492.56, -0.07, 0%) hovers below the crucial resistance level of 26700. Inability to breach 27600 can take the Dow lower to 26220 – a crucial near-term support level. The price action in the coming days will be crucial to see whether the Dow is going to move up towards 28000 or fall to 27000 and lower levels.
DAX (13179.89, +31.39, +0.24%) is moving up in line with our expectation. A key resistance is near current levels at 13250 which might hold at the first test and trigger an intermediate dip to 13100-13000. However, the broader picture continues to remain bullish to target 13400-13500 on the upside.
The resistance at 23400 on the Nikkei (23288.47, -15.35, -0.07%) mentioned yesterday seems to be holding well. As mentioned yesterday, while this resistance holds, a corrective fall to 23000 is possible before our preferred rise to 24000-24200 happens.
Shanghai (2987.15, +8.56, +0.29%) looks mixed and seems to lack strength to rise past the psychological level of 3000. However, with support at 2950, the bias is positive to see a break and rise above 3000 towards 3050 in the short-term.
Nifty (11966.05, +48.85, 0.41%) fell below 11900 but managed to bounce-back sharply from the low of 11850. A sideways consolidation between 11850-12000 looks likely in the near-term. A break below 11850 can drag it to 11800-11750 before the broader uptrend resumes.
Sensex (40469.78, +221.55, +0.55%)on the other hand can trade sideways between 40000 and 40600 for some time.
COMMODITIES
Commodities trade lower today. Crude prices dipped yesterday after US stock inventory rose by 4.3mln barrels (According to API) and 7.9mln barrels (according to EIA) for the week ended 1st Nov’19. Gold, Silver and Copper also looks bearish in the near term.
Brent (61.74) has come off sharply from levels near 63 on news of built in the US stock inventory. Immediate support is seen at 61 from where a bounce back towards 63-64 looks possible in the medium term.
Nymex WTI (56.37) has dipped slightly compared to the sharper fall in Brent. WTI needs to sustain a break above 56 in order to turn bullish for the medium term. Else we may see a fall below 56 to eventually head towards 54. While Brent remains above 61, we may expect a rise in WTI above 56 to sustain in the next few sessions.
Gold (1492) tested a low of 1483 yesterday before rising back from there. It would now be important to watch if 1480 holds as a crucial support and pushes back prices back to 1500+ or gives way for a deeper fall towards 1460/50 as per our earlier expectations. Preference would be for a fall from current levels.
Silver (17.60) is stable. It has clearly broken below the immediate trend support on the near term charts and while the fall sustains, Silver could fall towards 17.
Copper (2.6675) is likely to face stiff resistance near 2.7250 from where a fall towards 2.60 looks likely. View is bearish while below 2.7250.
FOREX
Dollar Index (97.99) has risen back but trades at crucial levels just now. A break above 98 if seen and sustains could indicate a rise towards 98.50/64 in the near term; else we could see resumption of a fall from current levels towards 97.50 or lower again. A rise above 98 looks more likely just now.
Euro (1.1061) briefly rose yesterday to test 1.1092 on the upside but has fallen in line with our expectation. Immediate target is 1.1050 on the downside. But long term looks bearish and has enough room towards 1.10 or lower for the next couple of weeks.
Dollar-Yen (108.68) has come down along with a fall in Nikkei. Immediate support is visible near 108.65/50 from where a bounce is expected in the near term towards 109.50.
EUR-JPY (120.22) has fallen sharply breaking below 120.50. While there is scope of falling towards 119 in the near term, EUR-JPY could face interim support near 120.
Pound (1.2844) is heading towards 1.28 while below 1.30. A break below 1.28 could push it down further towards 1.27/26. Watch decent support near 1.28.
Aussie (0.6866) has broken below the sideways range above 0.6875 and while the currency trades lower, it could target 0.6850-0.6825 in the near term before bouncing back from there.
The USDCNY (7.0149) has bounced a bit and could test 7.0258 on the upside within the current upward correction. Watch if 7 holds well to push USDCNY to higher levels above 7.05.
Dollar-Rupee (70.99) is showing signs of attempting to trade higher above 71. While 71.0-71.06/08 remains to be seen as important resistances, while 70.55 holds well, there could be room for a test of 71.25 on the upside. For the near term we could expect some rejection from anywhere between 71.08-71.00 that could push down Dollar-Rupee towards 70.55/50 again.
INTEREST RATES
Concerns over a possible delay in the phase one deal between the US and China has dragged the US Treasury yields slightly lower. The Treasury yields might move into a sideways consolidation within the current uptrend. The German Yields remain stable and have room on the upside to test their key resistances. The 10Yr GoI has support near current levels which can limit the downside and push it higher.
The US 2Yr (1.60, 5Yr (1.62%), 10Yr (1.81%) and 30Yr (2.30%) Treasury yields have dipped across tenors. Broadly the upmove in the yields seems to be losing momentum. Yields can fall from current levels and remain in a sideways range for some time. The 10Yr can be range-bound between 1.70% and 1.85% while the 30Yr can trade sideways between 1.70% and 2.20% and 2.35% in the coming days.
The German 2Yr (-0.65%), 5Yr (-0.59%), 10Yr (-0.34%) and 30Yr (0.19%) remains stable. The view remains the same. The 30Yr has room on the upside to test 0.28% which is a crucial resistance level to watch. The 10Yr on the other hand can test -0.25% and -0.20% on the upside.
The 10Yr (07.26.GS 2029) GOI (6.6859%) has dipped yesterday but might find support in the 6.6850%-6.68% region. %. A bounce from 6.68% will keep the bullish view intact to test 6.75% on the upside in the near-term.
Similarly, the 10Yr (06.45.GS 2029) GOI (6.4909%) has support at 6.48% which can limit the downside. While above 6.48%, the outlook is bullish and the yield can breach 6.50% and target 6.52%-6.54% on the upside.
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