- The German DAX had another strong session on Tuesday as we continue to plow higher.
- We are above the €18,400 level now, and it looks like we are going to try to get to the €18,500 level, and further than that to the upside.
- Keep in mind that this is the premier “blue-chip index” in the European Union, so I think it is most certainly worth paying close attention to.
- Ultimately this is a market that will continue to see a lot of hot money chasing it, as we are in a very strong uptrend.
Germany Leads the Way
Germany will lead the way for the rest of the European continent, so even if you are not trading this particular index, you should pay close attention to it as it could give you a bit of a “heads up” as to where we might be going in other indices such as the MIB, CAC, AMX, etc. Ultimately, this is a market that looks extraordinarily bullish and is much like US indices, being dragged along by momentum.
The ECB more likely than not will have to start to liquefy the markets, perhaps giving traders the ability to continue to push prices higher. After all, if Germany is in fact going to be in a recession, then it makes a lot of sense that traders are trying to get ahead of any ECB monetary policy decision. Ultimately, the worse the economy does in Germany, the better the stock market will do.
Underneath, I see a massive amount of support near the €18,000 level, and therefore you need to be paying close attention to it. I think given enough time, not only with the €18,000 level be support, but so would the €17,950 level. In other words, this is a “buy on the dips” type of market and I think that will probably continue to be the way forward for the foreseeable future. In general, I have no interest in shorting the DAX, at least not until we break down below the €17,500 level, which is basically where the 50-Day EMA is hanging around. Until then, this is a mark that looks extraordinarily bullish.
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