Tuesday January 14, 2014 - 03:31:13 GMT
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Morning Briefing : 14-Jan-2014 -0329 GMT
Dow (16257.94, -1.09%) extended the correction to 16240, breaking the Flag pattern on the downside. But it was mentioned earlier that any fall till 16100-200 may be just a normal correction. The trend remains up but we have been keeping an eye on the broader band of 16800-17600 as a lot of projections converge there. Initial sign of weakness will come only below 16050-100.
Dax (9510.17, +0.39%) is consolidating between 9350-9650 for the last 3 weeks. Any major move will come only beyond this range. Resistance is at 9750-800 levels and support is at 9350 and 9200 levels.
Nikkei (15582.83, -2.07%) opened after holiday below the support at 15700-750, below which the fall is expected to be faster and the targets of 15150-200 opens below the immediate support of 15400. Strength will return above 16150.
Shanghai (2006.78, -0.04%) is testing the 2000 level as expected after getting resisted at 2030, which is a sign of danger for the bulls. Now the drop can extend below 2000 as long as it stays below 2030.
Nifty (6272.75, +1.64%) closed above the week long range of 6140-6240 yesterday. As mentioned yesterday, as long as Nifty stays above 6220-30, the bulls will try to extend the rally. It is close to next resistance area of 6290-6310. Any weakness will come only below 6220-30.
Commodities are mixed.
Gold (1251.84) is stable. It is testing crucial resistance on the weekly charts just above current levels and only if this breaks we may see an eventual rise towards 1275-1300. Else a fall towards 1225 could be seen.
Silver (20.303) is trading higher and may target 20.5. A rise above 20.5-20.65 could take it higher towards 21.5. While below 20.5 we could see some ranged movements above 19 on the downside.
Copper (3.3405) is stable and is fluctuating near 3.35. It seems that the bulls and the bears are in conflict leading to no major movement in the price. Movement within the broad 3.30-3.40 regions may continue to remain but we need to keep an eye to get further signals within this range.
Brent (106.67) continues to remain ranged in the 106-108 regions. Bears are dominant but we need to see if it is able to push prices below 106. We may see ranged moves for some more time.
Nymex WTI (91.78) is trading lower in line with our expectation targeting 90 in the coming sessions. From there it could bounce back towards 93.
Dollar Index (80.62) has bounced from the support zone of 80.30-50. Below this support, it can reach the major support of 79.65-85. From a broader perspective, the Dollar index keeps trading in a contracting range within 79-81.50 for nearly 3 months now and only a break of that range would give a real direction.
Euro (1.3663) has bounced back to the major supply zone of 1.3660-90 once more. The bearish momentum will return only below 1.3550-70. Only a rally above 1.3725-65 may mitigate the immediate weakness.
Dollar-Yen (103.48) crashed exactly from our resistance of 105.40 and broke below 103.50 to confirm the downtrend. It was mentioned that the bulls would hope to protect 102.30-102.80 and they came at exactly 102.85 to keep their hopes alive. Now the downtrend gathers momentum only below 102.80 but a lot of supports are at the 101.50-102.80 zone.
The Euro-Yen Cross (141.38) has dropped sharply exactly from the strong supply zone of 143.30-70 mentioned yesterday. It was noted that, the selling pressure may return any moment as long as this zone was not convincingly broken above. Any bounce till 143-143.30 is expected to be sold.
The Pound (1.6398) has fallen exactly from our resistance of 1.65-1.6550 as it keeps consolidating between 1.62 and 1.66. As long as it stays above 1.62-1.63, more rallies may emerge towards 1.6740-50.
The Aussie (0.9032) has managed to break above the resistance area of 0.90 and reached 0.9087 fast. It can reach 0.92 as long if it manages to stay above 0.90. Weakness will return below 0.8950-60.
The US 10Yr (2.84%) fell before the Retail Sales data which is due today. We saw a slower growth in NFP on Friday and the same is expected for the Retail Sales today. The yield can now target 2.75% in the near term. The 5Yr (1.60%) and the 30Yr (3.78%) took a sharp fall before the data release.
The German 10 Yr (1.82%) dipped before the Industrial Production data today. The German-US 2Yr spread (-0.24%) remained stable and is in the support zone of -0.28%-0.30%. The UK 10Yr (2.82%) also dipped. We may now see it ranged between 2.75%-3.00% for some time.
The Japan 10Yr (0.66%) dropped with the fall in Dollar-Yen yesterday. The US-Japan 10Yr Differential (2.17%) can target 2.00%.
The Indian 10Yr GOI yield (8.71%) fell below the lower boundary of our range of 8.75%-9.00% before the CPI and the WPI data. The CPI declined to 9.87% in December, faster than expected. The WPI Data will come out today and will be closely watched.
6:30 GMT or 12:00 IST IN WPI
...Previous - 7.52 %
9:30 GMT or 15:00 IST UK CPI Y/Y
...Expected 2.10 % ...Previous 2.10 %
10:00 GMT or 15:30 IST EU IND Prodn (MoM)
...Expected 1.00 % ...Previous -1.10 %
10:00 GMT or 15:30 IST EU IND Prodn (YoY)
...Expected 0.80 % ...Previous -0.10 %
13:30 GMT or 19:00 IST US Retail Sales
...Expected 0.40 % ...Previous 0.41 %
...Previous - 11.16 ...Actual 9.87