Quite frankly, I believe that the German stock market is one that should have a good 2026, and I plan on being there, as the German government has been throwing money all over the place.
DAX
The German DAX has found itself a little bit negative during the trading session, losing 0.7%, but quite frankly, I think this is one of the places you want to be going forward. The German government is in fact throwing money at the economy and that of course is something that will support stocks typically—just look at the United States over the last 20 to 30 years and I do think that the DAX follows suit.
But it’s probably worrying about the tug of war between the improving domestic fundamentals and external geopolitical friction. The German composite PMI recently surprised to the upside of a reading of 52.5, signaling that we do have a resilient start to the year, but the index has struggled to sustain its break above the psychological 25,000 euros level.
Global Headwinds and Technical Levels
The primary headwind is the nonsense between global leaders about tariffs and breaking away from each other and all of that. As long as that’s the case, I think there’s a little bit of hesitation here. That being said, I do think that the 25,000 level is the most obvious spot on the chart. So, therefore, I am watching it very closely. I think it does signal resiliency if we can get back above there.
To the downside, the 50-day EMA is hanging around the 24,500 euro level, which of course is an area that was important previously. A breakout, pullback, retest type of situation I think is playing out here, so a little bit of patience probably goes a long way, but the DAX is somewhere I will have money at very soon.
Potential signal: This is the most obvious trade I see: Buying DAX on a daily close above 25,000 with a stop at 24750, and a target of 25,950 above.
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