The German index initially pulled back a bit during the trading session on Thursday, reaching down towards the €12,300 level. That’s an area that is significant support, and we have bounced enough to reach towards the €12,500 level. I think that the market will try to break above the €12,600 level, but it may take a couple of attempts to finally go higher. The €12,000 level underneath should be rather supportive, and I think it is the bottom of the overall uptrend, so I think that if we can stay above that level, there’s no need to start selling.
If we did breakdown below the €12,000 level, then I think we unwind rather rapidly. However, I think that the €13,000 level above would be targeted on the breakout and could go much higher. I believe that the market will continue to be noisy, but in general with the ECB suggesting on Thursday that interest rates will be low for an extended amount of time, it should help European equities overall. I think that eventually we will break out, but it may take the next several days of momentum building to do that. Ultimately, I think that short-term pullbacks continue to offer value that a lot of traders will be more than willing to take advantage of, as the market would be offering value and German companies “on the cheap.” Overall, the DAX will follow other global indices as well, so keep an eye on all of the major markets.