I have no interest in shorting this market, as it is clear that the sellers have been pushed away.
The DAX Index rallied significantly on Tuesday as we continue to look towards the €16,000 level. That is an area that has been important more than once, and I think it probably is a market that eventually will see some type of pullback that we can take advantage of on momentum. On the other hand, if we do break above the €16,000 level, then I think the market is ready to go much higher, kicking off its next “buy-and-hold” section. The economic numbers in the European Union continue to suggest that perhaps we are seen a bit of a recovery, so the DAX should be a leader to the upside.
The market has a significant amount of support underneath, as we had gapped higher during the open on Monday and have not looked back since then. With that being the case, I think this is a market that will ultimately find reasons to go higher, but it does not necessarily mean that it will be straight up in the air. I like buying short-term pullbacks and recognize that the 50-day EMA which is sitting just above the 15,500 level is an area that a lot of people will be paying close attention to. Because of this, I would be very interested in picking up a little bit of a pullback that show signs of support, because it is only a matter of time before the overall trend reasserts itself. The market does tend to move right along with the global reopening trade. After all, a huge portion of the German companies that drive most of the DAX are major industrials that do business across the world.
Looking at this chart, I think that you could talk about a potential move towards the €17,000 level, as we are breaking out of the €1000 consolidation range that we have been in. With this, I think the “floor in the market” is near the €15,000 level, especially now that the 200-day EMA is sitting just above it. This remains a “buy on the dips” type of market, as the DAX is a major leader overall. I have no interest in shorting this market, as it is clear that the sellers have been pushed away.