DAX Index Daily Fundamental Forecast – October 27, 2017

The DAX index shot higher yesterday as the index finally managed to break free of the 13000 region and pushed through 13100 and it ended the day comfortably above that, boosted by the shot in the arm given by the ECB in its statement and the following press conference yesterday.

DAX Shoots Higher

We had mentioned in our forecast yesterday and also in our weekly forecast that it was important for the bulls in the DAX to make a move this week to show that they are serious and also to prevent the investors from selling off their holdings and begin to look elsewhere. We had also said that the market had assumed that the QE tapering would be done quickly when nothing of that sort had been mentioned by ECB anytime. This assumption was based on the improving data from the Eurozone but the ECB put paid to all those hopes yesterday when it extended the QE further, much beyond the expectations of the market.

Though the ECB did cut the QE, they also extended the QE beyond September 2018 and this was a huge setback for the euro bulls but at the same time, it meant that a lot of liquidity would be available in the stock markets during this period. This was a boost for the DAX bulls who showed their appreciation by buying stocks in large number which helped the index to break through 13100. We expect this bull leg to continue for the short term as the market digests the events from yesterday.

Looking ahead to the rest of the day, we do not have any major news from Germany or the Eurozone for the day but with the breakout now confirmed, the investors can now look forward to this bullish momentum continuing in the short term and this should now target 13200 and then 13500 during this period.