- The DAX has shown itself to be negative during the trading session on Wednesday as we are reaching toward the 50-Day EMA.
- The 50-Day EMA should continue to be an area of interest, but quite frankly I just don’t see how you can be comfortable owning German stocks right now with the train wreck that is almost certainly coming for the Europeans this winter.
- At this point, the €12,500 level is probably the target, but it’s also going to take a bit of momentum to make that happen.
There is the possibility of a turnaround, but even if that were to be the case it’s likely that we would see a lot of resistance above, so even on a rally I think we’ve got a situation where exhaustion will be jumped on and we should continue to short. I don’t necessarily like the idea of owning stocks in general right now, and these rallies have all learned to be sold off rather quickly and the first signs of trouble.
Negativity Ahead
Germany will continue to suffer at the hands of the rest of the global economy slowing, and of course the market is likely to continue seeing plenty of reasons to be worried about exports. As long as exports are threatened, it’s difficult to imagine a scenario where German industrials do well, and as German industrials go, so goes the DAX.
Ultimately, I do believe that we continue to see plenty of negativity around the world, so I do think that it is only a matter of time before the DAX follows right along with the rest of the indices around the world. I don’t like the idea of buying until something fundamentally changes, even though we may have the ECB turning things around eventually. That being said, as long as the Federal Reserve continues to tighten, it will be a wrecking ball for the rest of the world. Because of this, the DAX will suffer at the hands of poor economies, not only in Germany but the rest of the world as well. Ultimately, the higher this market goes, the more interested I am in shorting signs of exhaustion. I certainly think that we are at the precipice of something breaking, so stocks are still toxic as far as I can see.
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