DAX Daily Fundamental Forecast – February 16, 2017

As we have been mentioning over the last many days, the DAX seems to be caught in a very tight range and does not seem to be knowing where it should be going and what it should be doing. Ideally, the bulls would have seized control by now and pushed the DAX further and further up but as we have been mentioning in our monthly forecast for February, the way the index closed last month was not very inspiring for the bulls as it failed to carry forward the momentum that it had managed to generate towards the end of last year. The Trump trade seems to be over as far as the DAX is concerned and the focus seems to be shifting towards the problems in the Eurozone and Germany.

Germany is expected to go to polls in September and the prediction is that Merkel is likely to face her strongest challenge yet, when the elections come over. And with the penchant for strange and shocking results all over the world, nothing can be ruled out and that is probably one of the reasons that the long term investors are thinking twice before investing in the stock market in Germany. The Eurozone always suffers from threats and fears of some country leaving it sooner or later and that could also be weighing on the index. Whatever the reason might be, it is clear that the bulls have lost the full control that they had last year and are now hanging in by their fingernails. Unless they make a push quickly, the risk is on the downside.

Looking ahead to today, there is no major news from Germany and so we can expect the consolidation to continue for the next few days atleast and as we have been advising, it is better to stay on the sidelines for now and watch for a breakout.