Daily Market Analysis

Terrorism Can Scuttle The Markets

Another terrorist attack in UK during the weekend. It is getting scary and if things continue to go in this direction than sooner or later it will have large scale economic implications For now we need to be a bit skeptical and cautious about the economy in General. Friday Non Farm Payrolls came in below expectations and even last month’s figures were revised downwards. This led to a sharp rally in Gold and other precious metals. However Unemployment tickled lower .Over all data was negative but it remains to be seen whether FED takes into consideration these figures. This week another event that is of note is UK elections . Also Saudi Arabia has blocked all transportation to Qatar in view of national security.China’s Caixn Services PMI came in at 52.8 against prior figures of 51.5. This is contradictory in nature as manufacturing seeing slow down but Services on a growth path. This indicated that consumer demand within the country is still good and the economic slow down has not altered the consumption pattern of the country. IMF has stated that US Fiscal deficit and China’s credit growth can pose a risk to Asian economy.Crude oil is better bid despite rise in Rigs for last week and production has reached it’s highest point since 2015. Re bar has seen sellers with prices breaking key support of the recent ranges. Equity markets remain range bound and skewed towards the upside.Dollar has retreated as Jobs data takes it’s toll on the currency. Speculative bets for dollar ‘s strength is at multi month low .

Zinc has been the laggard with price action poor and seller’s aggression seen in the counter. Technically a weak close. However prices sustained above the 1915 levels and only briefly went below that price. Physical delivery in LME has seen declines. Spreads have eased considerably as frontal month contracts have been offered. We need to closely watch 2510 levels and a break of which could attract further selling in the counter. However it will be interesting to see whether it can hold on the sub 2500 levels for long.

Support 1 – 2510 ( remain crucial in the short run )
Resistance 1 – 2526 ( basis 20 April’17 low )
Support 2 – 2485 ( basis 17 May’17 low )
Resistance 2 – 2547 ( will act as strong mid term resistance )

Lead has seen passive buying but has so far failed to convert that into price rise. The Lead / zinc pair has reduced to 395 against 590 seen just a few days back,indicating the strength displayed by the counter .Inventory has seen declines. Open interest positions has been rising indicative of shorts exiting from the counter ? Technically a good close with prices still hovering above 2100. The metal is trading in a tight range 2070-2130 and any break out on either side could see sharp movements in that direction.

Support 1 – 2070 ( strong support for the counter technically )
Resistance 1 – 2121.5 ( Today’s high )
Support 2 – 2043.5 ( This year’s low )
Resistance 2 – 2130 ( remain strong mid term resistance )

Aluminium has been weak with seller’s aggression seen in the counter. However the metal found buyers into the 2nd ring close and had a good close though price action remained weak throughout the day. Spreads have entered into Backwardation with short demand intact in the material. Inventory has seen a rise after many months of declines.Prices need to close above 1936 on the upside and on the downside 1909 provides support to the counter.

Support 1 – 1909 ( basis 31 May’21017 low )
Resistance 1 – 1936 ( basis 31 May’17 high )
Support 2 – 1900 ( remain psychologically and technically important )
Resistance 2 – 1944 ( Thursday’s high )

Nickel has shown some positive intent with good buying in the counter into the closing. However I remain a seller on every rise till it breaks important levels on closing basis as these false starts have yielded nothing in the past. Inventory has been supportive of the counter with decent declines at lower levels. Spreads have seen two way action in the counter. Technically it was a good close but prices need to take out 9000 in order to attract some sort of buying in the counter.

Support 1 – 8790 ( basis 24 June’16 low )
Resistance 1 – 8940 ( today’s high )
Support 2 – 8705 ( basis 07 June’16 high )
Resistance 2 – 9000 ( remain technically and psychologically strong zone )

Copper recovered smartly after being initially sold and strong buyer’s aggression in the 2nd half. Inventory has seen continuous declines. Good technical close with 5650 taken out again on closing basis. Spreads however are well offered. The metal has been trading in ranges 5575 -5725 and a break out of this will attract strong movements on either side. Friday’s bottom will remain a stiff support for the bulls. The conversion rates of the meal has been inching upwards.

Support 1 – 5600 ( psychologically and technically important )
Resistance 1 – 5700 ( psychologically important )
Support 2 – 5575 ( good support with double bottom formation )
Resistance 2 – 5725 ( mid term stiff resistance zone for the counter )

Tin had a negative price action with sellers aggression seen in the counter. Inventory has been declining. As reiterated earlier the failure of the metal to cross pivotal 20500 could attract technical selling.. Open interest has been rising indicative of shorts being established ? Failure of the metal to protect 20000 on the down side could attract further selling in the counter. On the upside it needs to close above 20300 to restrict technical damage to the counter.

Support 1 – 20000 ( technically and psychologically important )
Resistance 1 – 20200 ( basis 10 April’17 high )
Support 2 – 19900 ( basis 21 April’17 high )
Resistance 2 – 20310 ( today’s high )

On the macro economic parameter German and Euro zone Manufacturing and Services PMI came in above expectations. However France and Italian Services PMI were below expectations. Later in the day in US we have Markit Composite PMI ,Services PMI, Factory Orders, ISM Non Manufacturing PMI, New Orders and Prices and Non Farm Productivity. Today’s data assumes significance because of poor numbers reported by NFP Data and weak numbers today would decrease the probability of interest rate rise. Volatility will remain as Geo political tensions rise and slew of economic numbers due.