- The DAX initially tried to rally during the trading session on Tuesday, but you can see it has been smacked right back down as we continue to see a lot of noise out there when it comes to global indices.
- The DAX won't avoid any of this, and despite the fact that the DAX has been without a doubt one of the better-performing indices in the world, the reality is there's a lot of risk-off behavior out there, and that will almost certainly have a negative influence on stock markets, regardless of where they're at.
We have seen interest rates in Germany rise quite sharply, and part of this is due to spending or at least plans of spending. And that means that there will be more bonds issued. That got the DAX rallying a little bit over the last couple of weeks. But now we are starting to see the economic reality hit the markets, especially in the United States.
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If the US Goes Into Recession
If the United States goes into a recession, there's pretty much no way Germany doesn't get a little bit of that as well. Germany just exited a recession, and perhaps part of what we're seeing here is a celebration of that. But at the end of the day, I think the best you can hope for right now is that we are entering a new consolidation phase after a huge run higher.
At this point, I see the €22,000 level as a major support area, especially as the 50-day EMA rapidly approaches that level. If we were to break down below there, then I would step away from the DAX and start to look elsewhere. If we can turn around and take out the €22,500 level to the upside, then we could see the DAX head back towards the €23,000 level, which is essentially where the ceiling is at the moment. I don't have any interest in shorting this market, so if we do break down below the 50-day EMA and the €22,000 level, then I'm probably just going to step away altogether and just observe.
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