The German index initially went sideways, pulling back to the €12,500 level, before bouncing back towards the €12,600 level. I think that the market should continue to go higher, but we are probably going to need more confidence building. I think that ultimately the market will go towards the €13,000 level, which is my longer-term target. I think it might take several weeks, if not months together, but currently it looks as if the US indices are going higher, and that seems to have a bit of a “knock on effect” in Germany and vice versa.
Further helping the idea of the DAX rallying is the Euro falling in value against the US dollar, making the German export market a bit cheaper for the rest of the world. I think that the €12,000 level underneath is the “floor” in the market, and it’s not until we break down below there that I would be concerned about the uptrend. That doesn’t mean that we can’t have the occasional selloff, obviously we can, but I think that is a sign to get involved. In general, I like the DAX, it’s essentially the “benchmark” of the European Union. However, keep in mind that this is May Day, so the underlying index will be closed although CFD markets will probably remain open. I believe that selling is all but impossible, and I do recognize that eventually we should have the breakout that I think most of the market is waiting on.