- The DAX initially pulled back a bit during the trading session on Friday but then turned around to show signs of life again.
- By doing so, we are now testing the 22,500 euros level, an area that obviously would be one to watch in general.
- But at this juncture, I think we are trying to form a consolidation area that the market can grind away in.
A Little Stretched?
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This does make a certain amount of sense, considering that the market has recently gotten a little bit ahead of itself. But with Germany coming out of a recession, it does make a lot of sense that people would be very interested in owning German equities. Because of this, the market is going to continue to be very noisy, but I also think it's going to continue to be very positive in general. Because of this, I like the idea of buying dips on short term pullbacks. And this would be especially true if we got anywhere near the 22,000 level, the 22,000 level is an area that is a large round psychologically significant figure and also has been previous resistance.
So ultimately, this is a market that has given enough time, I do believe that you have a situation where we not only find buyers on dips, but eventually we break above the recent highs just underneath the 23,000 euro level. This is a market that's been very parabolic as of late. And therefore, the last couple of days of sideways action, I do think, makes quite a bit of sense, and I would leave it as such. I think it is still a buy only type of scenario. But again, you're looking for value. After all, we've had a run from the 19,600 euros level at the beginning of the year, all the way up to the 22,500 euros level. So, it's been pretty quick, but it's definitely very decisive.
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