The German DAX fell initially on Monday but has seen a lot of buying later in the day, as risk appetite has picked back up again in Germany.
German DAX
The German DAX fell initially on Monday as there was a lot of fear due to the fact that we are seeing the conflict in the Middle East escalate a bit. That being said, the market has fallen pretty significantly to break down below that 23,000-euro level that had been such reliable support. What I found interesting is that later in the session, we saw a lot of buyers jumping into the market to show signs of life.
As we close out the session, it looks as if the DAX is trying to do everything it can to reach the 23,500 level, which is actually a fairly strong return. We are up almost 1%.
Energy Sector and Geopolitical Influence
It is worth noting that there are signs that perhaps the G7 countries are in fact looking to release their strategic petroleum reserve into the market, and that might help alleviate some of the pressure in the petroleum and energy sector.
That being said, Trump has also stated plainly that he was nowhere near sending ground troops into Iran, and it appears that the market has rewarded that with a turnaround not only in the DAX but the US stock markets as well.
With that being the case, I do think we have a scenario where eventually we will probably continue the overall consolidation, but there are going to be a lot of concerns out there when it comes to the idea of sudden headlines causing chaos. This is an excellent setup, at least on paper, the way the chart looks, and with that being the case, I think you have to look at this through the prism of a market that is at least trying to stay in the same noise that we had been in.