- The German DAX gapped to kick off the trading session on Thursday, showing resilience after the US and EU seemed to be calming down tensions.
The German DAX gapped to kick off the trading session on Thursday, gaining a little over 1% almost immediately, and then ran towards the €25,000 level. This is an area that is a large, round, psychologically significant figure, so it is not a huge surprise to see that it gave a little bit of a pushback. Now, it looks like we are just hanging out here.
I suspect that after the tensions between the European Union and the United States have taken a little bit of a backseat, the DAX will be one of the big beneficiaries. That is essentially what we have seen so far. It is also worth noting from a technical analysis standpoint that the €24,500 level was an area that previously had been resistance, so it makes sense that there is a little bit of market memory there, especially with the 50-day EMA hanging about in the same region.
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Domestic Spending Pledges
This is one of my favorite indices at the moment, especially as the German government is pledging to spend a ton of money on infrastructure and military ramp-up. That, of course, has an outsized effect on the DAX itself, as domestic spending should help many of the larger companies in this index. This should continue to be the major tailwind for the DAX.
Over the longer term, I do anticipate that dips will continue to be bought into, and the measured move of the previous consolidation suggests that we get somewhere around €26,000. I don’t see that as being a stretch of the imagination at all, and that is, quite frankly, what I am expecting to see. I remain bullish on Germany at the moment.
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