The Dax Index has traded with plenty of volatility the past few days which mirrors the results seen on global indices. Trading this morning has produced some bullish momentum, but selling has developed short term as investors may be choosing to take profits within the German index as they nervously anticipate what will happen on US markets later today. Early calls on future markets in the US suggest there will be some positive action early on the S&P 500.
The past month of trading has still produced profits on the DAX Index. Equity indices certainly were hit on Thursday and Friday of last week as US indices saw selling momentum build. However, traders also need to carefully consider the record levels equity indices were able to touch in late August and early September.
Yes, there are plenty of analysts who believe equity values are overvalued and dangerous because price discovery remains hard to quantify due to the economic shadows casts by coronavirus. However, traders also know the markets cannot always go up, and that it is healthy for selloffs to occur in equity indices because this often shows that optimism is not in a wildly hyperbole mode. This may cause some traders to interpret the selloff on the equity indices late last week as an important part of regular price action and not the start of a bear market emerging.
Support levels for the Dax Index look to be the 12985.000 to 12950.000 juncture. Traders choosing to speculate in indices today should expect fast price action. The return of the Americans after a long weekend holiday will certainly exhibit early volatility when they enter the marketplace later today. Traders should have appropriate limit orders and stop losses working if they are already positioned in the Dax Index.
Speculators may want to consider a buying position and test the notion that the selloff experienced late last week was a momentary glitch in a strong bullish move. Certainly, dangers are ahead and volatility might lurk today because of the recent results in global indices. However, trying to time equity market direction can prove very dangerous. Therefore, if a trader wants to speculate on momentum, they might choose to remain buyers based on the mid-term results produced on the Dax Index which have been solidly bullish.
DAX Index Short Term Outlook:
Current Resistance: 13100.000
Current Support: 12985.000
High Target: 13150.000
Low Target: 12900.000
