During trading on Monday, we have seen buyers in Frankfurt yet again. The DAX is an index a lot of people pay attention to for the overall strength of the European Union, and while the DAX looks strong overall, the reality is that it’s finding quite a bit of a fight at the €15,600 level. If we can get a daily close above that level, then we could see Frankfurt really start to take off.
European Union Targets 2% Inflation
- However, short-term pullback seem to be the order of the day, and one has to wonder whether or not we are running out of momentum.
- After all, the economic situation in the European Union is not strong, and the European Central Bank reiterates its policy of getting back to 2% inflation almost daily.
- That works against stocks, as it could give a bit of a boost to the Euro.
Speaking of the Euro, it is trying to recover a bit during the day on Monday, but the reality is that the Federal Reserve is the world’s central bank, and as long as they stay tight with monetary policy, a lot of people are going to struggle to get a grip on profitability. From a technical analysis standpoint, the 50-Day EMA sits just above the €15,000 level, so I think that remains a potentially important support level. If we blow through there, things can get quite ugly, and it could open up a bit of a trapdoor for this market. On the other hand, if we do get a daily close above the €15,600 level, you simply cannot fight what the markets doing, regardless of whether or not it makes sense. Anymore, stock markets have very little to do with the economy, and everything to do with which way liquidity is flowing. The gamblers mentality has been in full display for the last 14 years, and I do not expect that to suddenly change. That being said, eventually something is going to break, and it’s probably going to break quite catastrophically. However, we never really know when that’s going to be, so we need to play the market that’s in front of us. At this point, short-term range bound traders continue to push the DAX around in a relatively tight and well defined area that you can exploit.
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