DAX, CAC and SMI Forecasts – European Indices Bounce for the Session

DAX 40 Technical Analysis

European stocks show a bit of a relief rally. The DAX has rallied a bit early during the trading session on Wednesday as the slide in crude oil has helped the German heavy manufacturing base, such as BASF, Bayer, ThyssenKrupp, and a couple of other large companies, and that has driven the DAX higher.

The input cost being dropped, of course, would drive up profitability, and it looks like we’re at least getting signs that the conflict in the Middle East might be winding down. I find it interesting that we are now above the 23,000 euro level. If we can hold that, it would be a good sign as automotives such as BMW, VW, and Mercedes all have done well also. Just a general all-around rally here. I like this market above 23,000.

CAC 40 Technical Analysis

The CAC in Paris, of course, is very sensitive to risk appetite, and we did rally enough to touch the 8,000 euro level, but we’ve struggled a little bit there. With this, I’ll be keeping an eye on the CAC. It certainly looks like it is going to be a little bit of a laggard, but we’ll have to see how that plays out.

The CAC has been testing the 50-day EMA and the 200-day EMA quite aggressively during the day. We’ll see, but I think you’ve got a scenario where traders will continue to see this through the prism of a market that maybe will have something to say if we can break above the 8,050 euro level.

SMI 20 Technical Analysis

Finally, the Swiss 20 looks like it is testing the 50-day EMA. It underperforms a little bit during aggressive rallies because its components are mainly thought of as defensive such as Novartis and Nestle.

However, today’s move is driven a bit more by the financial sector, think UBS, following recent regulatory clarity and a stabilized global banking outlook. UBS is acting as a proxy for European financial health. Nonetheless, we are a little overextended so a pullback I suppose could be a real possibility here. I’d watch the 200-day EMA for a floor.

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