The German index tried to rise early on Wednesday, but has since fallen. At this point, we are looking for a small bounce, but we will have to be patient.
DAX
The German index did rally just a touch during the beginning part of the Wednesday session, with the 25,000-euro level being targeted. We have since fallen all the way down to the 50-day EMA, bouncing from there.
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The German index will be moving on a lot of different things, not the least of which would be the latest headlines coming out of the Middle East due to energy concerns. But there are also concerns right now about the overall European economy. Sooner or later, I think they are going to have to deal with that, but as things stand right now, it looks like the ECB is possibly going to have to tighten based on energy inflation. There are some questions about whether or not the central bank can do anything right now, and I think it is kind of stuck.
Macroeconomic Pressures and Key Floors
Ultimately, though, I think this is a market that eventually does rally, and it does bounce. The 24,000-euro level underneath, I think, is a major floor in the market. We could go down to test that, but as things stand right now, I still think it's more or less a buy on the dip scenario, but it's very small micro movements.
This is not a market that I think is going to be easy to deal with, and eventually, we could break above the 25,500 level. If we break above there, then I think we could go much higher.
Ultimately, I do believe that this market will find its way higher given enough time, but I think there are a lot of questions right now about what's going to actually happen with the economy. The United States is still outperforming Europe, and I think, therefore, even though I don't want to short the DAX, I think it does underperform the New York indices.
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