The German DAX has been all over the place on Tuesday as we continue to see a lot of noisy behavior.
Quite frankly, the biggest factor when it comes to indices, at least in places like Germany and the United States, continues to be the massive amount of momentum that we see in rates rising.
That's true in Germany as we are now above 3.18%. That puts a little bit of a weight around the neck of German equities, and I think that will continue to be something that we need to watch.
Underneath, current trading levels we have the 24,000 level, an area that is a large, round, psychologically significant figure and an area where buyers will more likely than not come back into the picture to support the DAX, all things being equal.
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Watching Interest Rates
If we break to the upside, the 25,000 level could be targeted as it is a large round psychologically significant figure and an area that we had gapped lower at the beginning of March, but it seems like we are trying to get back to fill that gap yet again.
That being said, this almost certainly seems to be a situation where you're going to have to watch interest rates not only in Germany, but probably the United States as well, as it gives you a little bit of a heads up as to where things are going.
With that being said, I think you can expect a lot of noisy and choppy behavior, but given enough time, traders are still looking at this through the prism of whether or not the yield on the 10-year bond in Germany is more attractive than taking the risk on equities.
As things stand right now, I think we're just simply bouncing around and trying to figure out where to go.
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