The German DAX has been noisy on Wednesday, as it looks to rebound in an uncertain environment.
DAX
The DAX has rallied a bit during the trading session on Wednesday, partially in reaction to crude oil prices dropping. Keep in mind that crude oil costs in the European Union are going to be a major focus for risk appetite and what to do next with European equities, as the industrial base in Germany is such a big driver of where things go.
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Higher global bond yields, of course, are working against any real strength, but the fact that we started to see a little bit of help in the form of oil slowing down its ascent has provided a short-term relief rally for the DAX. The market is currently hanging around the €25,600 level, an area that is short-term important, as it has been a bit of a barrier.
Ultimately, though, this is a market that more likely than not will continue to move on the latest headlines coming out of the Middle East
Of course, German headlines specifically will matter as well. Rates continue to be a major factor. The ECB is expected to tighten again. At least, that is the direction we are heading in. In this environment, it makes a certain amount of sense that traders might be hesitant to go all in on the DAX.
However, having said that, we just made a cross on the stochastic oscillator in the oversold condition. From a technical analysis standpoint, the market is essentially behaving the way that you would anticipate. There should be plenty of support near the 25,000 level, as well as the 25,200 level.
Longer term, we do look bullish. So, I remain positive on Germany, but I recognize that there is a lot of noise out there to give headaches to traders. The market will continue to be one that is very influenced by external factors.
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