DAX Fundamental Analysis – week of February 20, 2017

The DAX index continues to trade within a tight range and as we have been mentioned in our forecasts over the last few weeks, the range is getting tighter and tighter and the bulls should be sweating bullets now as they have just not been able to push through with the index and push it towards their first target of 12000. What makes the situation even worse is the fact that the US stock indexes have been posting record highs for many days now and under normal circumstances, this would mean the DAX would also have pushed through much higher now, as an effect of that. But this has failed to happen and with the days ticking by and with the ever present risk of a correction in the stock marketing looming ahead, the DAX bulls could be in serious trouble if they are unable to push through in the coming days as well.

But credit should also be given to the bulls that they have managed to hold on for so long and in the past 2 weeks, the bears have not been able to push the index below 11400 even for a brief while despite all the global fears and uncertainty which raise their heads now and then. This should give some heart for the bulls but the longer they take in bringing on the next leg of the bull run, the more they expose themselves to the wrath of the bears not only in Germany but in other parts of the world as well.

Looking ahead to the coming week, we have a host of data from Germany which includes the CPI, BUA monthly report, Manufacturing and Services PMI, IFO Business Climate and Final GDP. All of these are going to directly affect the DAX and if all this economic data continues the trend of strong incoming data from Germany, then it could provide a great opportunity for the bulls to finally be able to push the DAX beyond the highs of the range and towards 12000.