DAX Fundamental Analysis – week of February 27, 2017

For a brief while last week, it did look as though the bulls had finally managed to push through with their plans and brought about a break in the range trading that has been going on since the beginning of the year. For the past few weeks, the DAX has been unable to break through 11800 clearly and reach our target of 12000 and this was proving to be highly frustrating for the bulls in the index. The fact that this was happening when the US stock markets were on a roll made the situation even worse for the bulls.

Careful with the DAX Bull Run

It was just about getting desperate for the bulls when the incoming data from the eurozone and Germany finally helped the DAX to break through the range and reach 12000. But the breakout was very slow and it didnt appear like a breakout from a 6 week range would normally look. We had mentioned the same thing in our daily forecasts as well and warned our readers that though the 12000 target was achieved, the lack of a strong follow through could mean that it isnt a clean break as yet.

And we were proved right towards the end of the week as the DAX, along with the other European stock markets corrected over a day or two and it is now back into the range and increasingly looking very weak. We advice the buyers in the index to stay away for now as the DAX seems quite weak and unable to push through the resistance barrier and that is not a good sign.

In the coming week, we have the Prelim CPI, unemployment change, manufacturing PMI, services PMI and retail sales data from Germany and we expect the index to consolidate but with a bearish bias. It might have a strong start to the week but it will gradually weaken as we go into the second half of the week.