- I can see that this index is trying to do everything it can to rally.
- At this point in time, it looks like there is a significant amount of resistance just above that we will have to pay close attention to, but we also have to pay close attention to the geopolitical issues and of course the way that risk is starting to travel through the markets overall.
- It’s not just the Germany situation at this point, it’s a question as to whether or not central banks around the world will do everything, they can to protect traders as per usual.
In general, this is a market that I think is going to be supported underneath, especially near the 50-Day EMA. After that, we have the 18,000 level, which of course both could attract potential buyers. As long as we can stay above the 18,000 level, I think that the DAX will continue to be bullish overall, but I also recognize that the DAX doesn’t operate in a vacuum at all, as it is sensitive to a lot of the same things that other markets are. The markets will of course have to pay attention to the idea as to whether or not traders are out there willing to jump into the markets, based unfortunately, more likely than not, on the idea of liquidity.
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As goes Germany, so goes the European Union
Ultimately, Germany will determine the fate of the European Union. If the DAX starts to fall apart, I’ll be looking to short other indices such as the CAC in Paris, or perhaps even more enticing, the idea of shorting something like the MIB in Italy. After all, the German economy is much stronger than the other ones in this part of the world, and therefore it’s likely that we will continue to see a bit of a “knock on effect” in this region. As long as Germany does okay, the other indices should stay somewhat afloat. However, when we see the German start to sell off, that means that we have a lot of issues in the European Union overall, and that could send this market down toward the 200-Day EMA, perhaps down to the 17,300 level after that.
While I do not see a massive selloff coming, I do think that we are a little stretched at this point and I think it makes a certain amount of sense for this market to pull back a bit and try to offer a bit of value for those who are patient enough.
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