- The DAX initially rallied during the trading session on Tuesday, but it did give back quite a bit of the gains.
- That's probably not a huge surprise because we tested the crucial 23,500 euro level only to give back those gains, which this area had been resistant a couple of weeks ago.
- At this point, then you have to ask yourself, are we going to continue to go higher?
Well, we might get a short-term pullback, but there's literally nothing on this chart that screams that the market is in trouble. In fact, I think the DAX continues to go much higher based on German spending. The German government is about to spend a record amount of money on all kinds of different things, military infrastructure, et cetera, to get things going. And that generally helps the stock market.
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Interest rates are rising in Germany at the moment, and sooner or later that becomes a problem, but I don't think that's an issue yet. Ultimately, this is something that asset holders like because it inflates prices, and that's exactly what we're seeing here. Short-term pullbacks make a certain amount of sense. I would expect the 23,000 euro level to be one of interest, followed by the 22,500 euro level.
Out of all of the indices that I follow, the DAX right now is by far, head and shoulders, the strongest one. And therefore, I will continue to look to get involved on short-term dips to take advantage of cheap contracts. Again, I don't see anything negative on this chart, but if we were to break below the 22,000 euro level, then we might be talking about a deeper correction, but we aren't going to do that anytime soon. I think we're more likely to see 24,000 euros than 22,000 euros at this rate.
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