Tuesday, March 8, 2011

Market Morning Briefing


The Dow (12090.03, -79.85, -0.66%) came off a decent bit yesterday and is coming close to testing important Support at 12000. If this holds, we would still target 12500-700 in the medium term.

Asian indices are flat/ mixed, ranging between -0.28% (New Zealand) and +0.98% (Korea), possibly waiting for clues from the USA (as to whether the 12000 Support will hold or not) and from the Middle East, where Crude has cooled off a wee bit.

The Sensex (18222.67) and Nifty (5463.15) might get bought on dips today as Crude is slightly lower and there are some chances of the Congress-DMK shaking hands again.


Crude (105.14) surged yesterday to a high of 106.95 and eased following a report from BBC that the Libyan leader might leave the country. Technically the charts are still looking strong with room for further rise to 110-112 in the coming days/weeks. Support is seen in 100-98 region.

Gold (1432) tested its crucial 1445-1450 Resistance reigon and has come off from there slightly. As mentioned yesterday, 1445-50 is a very important Resistance region to watch and a break above it might take it further up towards 1475-1500. While 1450 holds, there is a chance of a fall to 1400-1370 once again. But it is too early to take a call on this and we will have to wait and see.

Silver (35.72) has come off sharply from yesterday's high of 36.75. However, the Support at 35.50 is still holding and while above 35.50 the outlook remains bullish for further rise to 37+ levels.

Copper (4.32) has failed to see a strong rise past 4.50 and has fallen sharply. With this sharp fall yesterday, Head and Shoulder pattern formation seen on the charts. A strong break below 4.25-20 region would confirm this. TO see the Head and Shoulder pattern on the Copper chart click on the following link:


Slight recovery in the Dollar Index (76.52) from yesterday's low near 76.12, further rise possible. Sterling Pound (1.6196) has been the biggest loser, coming off from a high near 1.6341 on news that Feb Retail Sales did not do as well as Jan. Supports may be there in 1.6150-00 region.

The Euro (1.3980) trades slightly lower compared to yesterday's high near 1.4036 and Dollar-Yen (82.28) has come up from yesterday's low of 81.95. Dollar-Swiss is steady near 0.9268 while the Aussie (1.0118) has bounced a little after falling sharply to 1.0090 overnight from yesterday's high near 1.0185. Thus, the Aussie has been the most volatile pair since yesterday. But, it has Support in the 1.0090-70 region.

Overall, the Dollar is still very weak and might find short-term selling interest on rallies for a few more days. The underlying concern seems to be that the US is unlikely to raise rates whereas the Eurozone is more likely to.'

In Asia, the Sing Dollar continues to trade strong near 1.2660. The Korean Won too is strong near 1116.40. Elsewhere in the world, the Russian Rouble (28.19) has seen strong gains over the last few months, with the USD-RUB coming down from 31.67 at the beginning of December. Dollar-Rupee has opened steady today at 45.0550/0650.


The 3M USD LIBOR was unchanged at 0.31%. The 2Y and 10Y yields were up 1 bps and 3 bps each to quote at 0.70% and 3.51% respectively. The 10Y yield has very strong Resistance in 3.50-70 region and while it holds the yields can come down further to 3.20 in the coming days/weeks. To see the 10Y US Yield chart click on the following link:

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