The German DAX fell pretty significantly during the trading session here on Thursday but managed to find a little bit of support near the 200-day EMA.
That of course is a very important level to watch as many people use the 200-day EMA as a measure of the trend.
The 200-day EMA is basically flat, so you do have to think that perhaps we have a situation where we are at least trying to fight back. I don't have any interest in trying to get too cute and short this market and I do think that eventually you will have the DAX recover. Quite frankly, if you look at the price action during the session it was rather impressive and I think it tells us most of what we need to know.
And most of what we need to know is just that there are value hunters out there willing to get involved and they are more than willing to take advantage of cheap German stocks.
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Energy Drivers and Yield Barriers
The energy situation in the European Union of course is a major driver and we'll have to see how that plays out if we can get energy coming out of the Middle East at a fairly cheap rate. In other words, if we see the war in the Middle East start to look a little bit more positive, then you have the possibility of the DAX really taking off.
I do not want to short this market. This is a market that continues I believe to go higher, but I would also as a side note watch the German 10-year yield. It is above the 3% level which seems to be a bit of a barrier for bullishness as well.
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