The German index has rallied a bit during the trading session on Thursday as we are bouncing from a large psychologically significant figure in the form of 24,000 euros.
Perhaps more importantly, we are also seeing the 10-year yield in Germany drop a bit, so that helps things as well.
The European Central Bank raised rates by 25 basis points, but it doesn't sound like it's going to get aggressive going forward. In fact, it was suggested in the statement and press conference that perhaps this is a part of the world that might struggle a bit with employment going forward, and that, of course, will have an influence on how the rest of the economy behaves.
Furthermore, you should also recognize that this is an area that previously had been supported, so it makes sense that we get a little bit of a bounce here, and now we are looking at this as a market that is trying to recapture the 200-day EMA to the upside. So far, it's managed to do it, but it is giving back some of the gains late in the day.
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Technical Support and Long-Term Outlook
I think this lends itself to be a market that is going to be very choppy in the short term, which makes sense. After all, we are hovering around the crucial 3% rate in the 10-year yield in Germany, but at the same time, we have a lot of questions about energy in the Middle East, whether or not it's going to make it to that massive German industrial base.
At this point, I am more bullish than bearish, but I also recognize that it's very likely that we try to find some type of short-term range, perhaps even an intermediate-term range, but in general, with all of the spending that the German government plans on doing this year, I remain longer-term bullish of the DAX.
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