DAX Daily Fundamental Forecast – December 09, 2016

The DAX continued to skyrocket yesterday as a combination of the breakout from its long time range yesterday, when it broke through 10800, and the announcement regarding extension of the QE during the ECB press conference, cheered the European bourses and this helped to push the index higher towards 11200. It sits just below that as of this writing. Investors and buyers would be looking for a retracement towards 10800 region for them to get long again, in case they are not long already.

The ECB announced an extension of the QE program till the end of 2017 and said that it would be closely involved with the markets till atleast 2018. Though the markets did expect that the QE would be slightly extended and tapered off, it did not expect it to continue till the end of 2017 and this helped push down the euro and boost the stock markets as it meant that there would be added liquidity available in the markets with the help of the ECB and this would help keeping up the demand in the markets. This brought cheer to all the stock markets in the Euro region and with Germany being the prime member of this bloc, it helped to boost the DAX as well. The breakout from the 10800 region was too quick for those buyers who were looking for a breakout to buy and those buyers would now be waiting for a correction and a retest of the breakout region for them to load their buys.

The immediate target for the bulls would be 11400 and we do not see progress beyond that, without a sharp correction, in the short term. Looking ahead to today, we do not have any specific economic news from any part of the Eurozone for today but expect some weekend profit taking to happen which might lead to a small correction in the DAX.