DAX Index Daily Fundamental Forecast – January 31, 2018

The DAX index continued to move lower during the course of the day yesterday as the global stock markets have been gripped by a sense of panic. There has not been any fundamental reasons for the fall from grace for the stock markets but it seems to be more of flows and general worry that the stock indices are too high for anyone’s liking.

DAX Index Under Pressure

Yesterday, we saw the risk sentiment getting a beating and this led many of the stock indices lower and the DAX was no exception. In fact, the bulls should be given due credit for the fact that they were able to keep the index afloat despite all the sell offs that we are seeing in the stock markets around the world as the index closed the day above the 13200 region. It remains to be seen how it will fare when the market opens again today.

We also witnessed a bond sell off during trading yesterday and as the bonds rise, it becomes difficult for large investor to borrow money at low costs and this also affects the stock markets. Overall, it has to be understood that we are close to the end of the month and hence we are likely to see a lot of month end flows. We believe that what we are seeing over the past 2 days are more to do with that than any specific fundamental move. The currency markets seem to be stable and that is enough proof that there is no fundamental or economic change that is bringing about this sell off, atleast this time around.

We had mentioned something similar in our forecast yesterday and that is why we had warned our traders not to be carried away by the current moves in the stock markets and always trade with a stop loss. The prices over the last couple of days of a month could be in total contradiction to the actual trend and traders should ensure that they dont get fooled by such kind of moves during this period.

The DAX index is likely to find some support in the 13200 region for the short term though the open today is likely to see the index come under pressure as the US stock indices closed lower for the day yesterday. We have the inflation data from the Eurozone a bit later and this is likely to bring in some volatility in the DAX even though we expect the index to be under pressure for the day.