Wednesday December 10, 2014 - 03:16:16 GMT
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Morning Briefing : 10-Dec-2014 -0316 GMT
When equity markets are fueled by liquidity it is hard to call the top. Central bank policies are changing but trading the top is a dicey thing.
Dow (17,801.20, -0.29%) the speculation of FED raising rates triggered the market fall, which however recovered just as quick. From pure technical perspective, Dow is a sell with the stops above 17,900 or 18,000 for targets of 17,500 and 17,200. Caution however, technical selling has rarely worked for past few years in liquidity fueled rally like this.
Nikkei (17,530.39, -1.59%) fall was triggered by fall in Dollar-Yen. 17,800 is now a strong short term resistance. 17,420 is an important support on the downside and will void short term bullishness. The long term is however bullish due to structural changes in portfolio allocations.
The 5% fall in Shanghai (2,852.10, -0.10%) is actually good news for long term bulls. Shanghai is in the beginning stages of long term rally, and long term investors should use corrections as opportunities. In short term, the targets are at 2,980, with strict stops.
Dax (9,793.71, 2.21%) conclusively fell below 10,000 and below our stop loss of 9,800. Unless Daxmoves higher above 10,000, we could see a double-top situation at 10,000 with long term chart reading changing from S-H-S to S-H-H-S pattern (S=Shoulder, H=Head). However, a QE by ECB will be highly bullish for all European stocks including Dax.
Nifty (8,340.70, -1.16%) continues its sharp slide on profit booking. The supports are at 8,320, which we expect to hold for a bounce to 8,400-8,440. Break of 8,320 could open the targets of 8,200 and lower.
Metals have shown signs of recovery and may move higher in the coming sessions while Crudeprices continue to trade lower. Copper is in a ranged mode.
Gold (1228.63) has risen sharply on Dollar weakness yesterday and has move above 1225 levels making clear indication of a reversal. We may see a stable rise towards 1250 in the near term while above 1225.
Silver (17.056) has also moved up sharply and may now follow some quick recovery towards 18-19 region in the coming weeks.
Brent (65.83) and Nymex WTI (62.90) remains stable, trading lower but as said earlier may soon call a bottom near current levels. The levels on the downside just now is expected at 60 and 58 respectively from where a bounce may occur.
Copper (2.9255) is fluctuating in the 2.95-2.85 region for now and may continue this for some more session. Overall trend is down.
Euro (1.2369) continues to confound with another sharp rejection above 1.2400 levels and at a falling trendline. Crucial levels to watch out for are 1.2320 support, and 1.2430 and 1.2485 resistances. Break below 1.2280 would open the targets of 1.2110-1.2080.
Pound-Dollar's (1.5665) continues in its November range of 1.5600-1.5750. It is testing a falling trendline but unable to break above till now. For the day, the bias is bearish with stop of 1.57 for targets of 1.560 and 1.5550.
Dollar-Yen (119.76) crashed from 1.20 to 1.18 before recovering to 1.1990. Fortunately, the stops below 118 were not triggered. We look to exit the buy positions for now. Though the trend is bullish, the easy moves are done. For the day, we play on the short side with stops above 120.40 for the targets of 119.20 and 118.70. 119.15-119.25 will be closely watched.
Dollar-Rupee (61.88) is in a trading range. 61.70-61.80 zone is a good support and we are likely to see Rupee weaken from these levels. We look for a target of 62.20-62.35 in the month of December.
Aussie-Dollar (0.8272) achieved its targets of 0.82s before seeing a good short covering. 0.82 would be retested for any technical bounce to happen.
China has put a step forward to curb the expanding local-government bond yields boosting a fall in the Chinese stocks. The Japanese bond yields are lower today. The 5Yr (0.070%), 10Yr (0.412%) and 30Yr (1.387%) have fallen resuming the longer term downtrend contrary to our expectation of a near term rise. But the 10Yr yield may have some possibility of rising towards resistance near 0.5 while the 5Yr may move up to 0.1-0.15% in the coming weeks.
The German yields continue to fall with the 2Yr (-0.037%) stable and the 10Yr (0.684%) coming down from 0.713%.
The US bond yields have declined. The 2Yr (0.618%), 5Yr (1.629%), 10Yr (2.219%) and the 30Yr (2.874%) have all fallen from 0.633%, 1.668%, 2.263% and 2.909% respectively.
Indian 10Yr (7.9019%) is moving on the downside targeting 7.80% in the coming weeks. As said earlier, Rupee may either remain stable or strengthen getting a boost from the yields.
1:30 GMT or 7:00 IST CN PPI (YoY)
...Expected -2.30 % ...Previous -2.20 % ...Actual -2.7 %
1:30 GMT or 7:00 IST CN CPI (YoY)
...Expected 1.60 % ...Previous 1.60 % ...Actual 1.4 %
9:30 GMT or 15:00 IST UK Trade Balance
...Expected -9.50 £ (Bln) ...Previous -9.82 £ (Bln)
No major data release yesterday.
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