- The German index initially did rally a bit during the course of the trading session on Friday, but the 20,500 euros level seems to be a little bit of a barrier.
- The market certainly looks as if it is trying to do everything it can to finally break above there, but we just haven't had enough of a move and enough momentum to make that happen.
- A short term pullback at this point in time would open the possibility of getting a little bit of value in a market that has been for traders trying to take advantage of the longer term trend.
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After all, we are just seeing the DAX rally from the 19,200 euros level to the 20,500 euros level in about two weeks, a pretty significant jump. All of this being said, even if we were to pull back and fall from here, the 19,750 euros level is an area that I think will hold as a floor, and that's assuming that we even get that far.
I do believe that over the longer term, the DAX is likely to continue going to the upside, perhaps trying to reach the 21,000 euros level, especially now that the ECB is starting to loosen monetary policy a bit further. So, with this, I think you've got a buy on the dip opportunity setting itself up. Furthermore, if the European Union does start to recover, well, Germany is the first place that money goes flying to. So, it all ties together quite nicely. In a sense, equity traders go to Germany for safety. But then again, those who are not involved in the European Union right now will go to Germany first to dip their toe in the water. So, it's a win-win for Germany over the longer term, at least in relation to other European indices.
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