The DAX continues to see a lot of noise at the moment, with headlines and interest rates taking front and center stage.
DAX
The German index has been pretty noisy during the trading session here on Wednesday as we try to sort out where to go next. After all, this is an index that I think will continue to move on the latest headlines coming out of the Middle East, mainly because of what it does to the bond markets.
Interest rates rising, of course, would be a problem. That, also with the potential for energy to continue to climb as far as its price is concerned, is really bad for the German economy, as the large industrial base such as BASF or Mercedes-Benz, BMW, they all have major energy input costs that they have to worry about.
Market Indicators and Potential Bounces
With that being the case, I am a bit cautious. I think a short-term pullback probably makes a certain amount of sense. I don't necessarily think that we are going to see a collapse, but I would be very interested in looking at a bounce from the 200-day EMA, possibly the 50-day EMA.
Given enough time, though, I think we've got a situation where traders are going to just look at this through the prism of maybe an overbought market in the short term, but eventually one that sees more people being interested in maybe something to the effect of playing a bounce might be the way forward.
The 24,300 level is an area that's a bit of a barrier; clearing that, I think, brings more FOMO in. German 10-year yields are at about 3.04%, and I think that continues to be something to watch as well. Right around that 3% level things get a little squiggly, so keep an eye. I do think eventually the DAX finds 25,000; I just think it's going to be very noisy to get there.