The German index rallied significantly during the trading session on Wednesday, breaking above the vital €12,750 level. The market has formed a bit of a bottoming pattern and looks as if it will continue to be a “by on the dips” situation if we can continue to get Italians to play nice with each other. Ultimately, I think that this is the first place money goes looking to invest in the European Union, so it makes sense that we have seen a return to this level and capital flowing into the German markets.
I recognize that the €13,000 level above will be important, and I recognize that it will be a very noisy and difficult markets to deal with. I like the idea of going long in adding as the trade works out in our favor, and I believe that the market continues to find reasons to go higher, unless of course something drastic happens in Italy, which of course can’t be ruled out. As I record this market, the DAX is up 1.4%, a nice move indeed for the day. However, we have sold off so drastically that I think this bullish action could last for several days in a row, unless of course we get those negative headlines coming out of Italy that could cause major issues. Until then, I remain bullish of this market, but cautious about my position size.