DAX Index Daily Fundamental Forecast – July 10, 2017

Though the DAX index recovered on Friday, we still believe that the bears are in control of the index and the bulls are going to find it tough to push the index much higher in the short and medium term. This is in sync with the trend around the world where we are seeing a lot of the major stock markets in a bearish phase as the bonds and the yields seem to be having all the spotlight to themselves.

DAX Still Choppy

The DAX broke back above 12400 again on Friday but this is more a correction of the downtrend and some choppy trading as well as the investors are yet undecided on which way the stock markets are going to go. This action is similar to the action in the various major stock markets around the world and especially in Europe. We have been mentioning of how the improving data from Europe has, paradoxically, brought about trouble for the stock market whereas under normal circumstances, they would have boosted the markets. Here, what we are seeing is that with improving data and with the ECB talking seriously about tapering, there is a fear that the ECB would start pulling out funds from the stock markets and so the bulls would want to get out smoothly. This also means that the currency and the bonds have better yields which is another reason for the funds to move out of the stock markets.

On the other hand, we also have the elections in Germany in September and though Merkel is in the clear lead and is expected to continue to occupy power, the results from the various elections over the past couple of years has shown that nothing can be taken for granted and this could also be a reason for the investors holding back and not being bullish on the DAX just as yet.

Looking ahead to the rest of the day, we do not have any major news from Europe and with not much market moving news over the weekend as well, we expect some consolidation in the DAX index on either side of 12400.