DAX, TSX and Bovespa Forecasts – Global Indices Continue to Focus on War

DAX Technical Analysis

The German DAX is down a touch for the trading session, which is interesting because we did have a major spike higher during the session on Monday. Perhaps people are starting to think a little bit deeper about the war in Iran, as opposed to how they behaved yesterday when Trump had said that they were talking.

We are right in the midst of perhaps forming the death cross with the 50-day EMA dropping below the 200-day EMA. But really, at this point, I think you have got a situation where the market is going to remain very volatile. A couple of companies to keep an eye on are SAP, which has dropped over 4%, and Bayer, which is down almost 2%, leading to the impact of the selling pressure. 22,650 is an area that I would be watching. I think if we can stay above there, then we will look to 23,000, which is your next key level, to take out to the upside, assuming that the buyers come back.

TSX Technical Analysis

In Toronto, we are seeing the index try to build on a recovery on Tuesday. We will have to wait and see but I think a break of the highs of the Monday session would be a very good sign. Keep in mind that the TSX in Toronto is a resource-heavy index. So, with oil falling a bit, it puts a little bit of weight on the index, but at the same time, it reduces inflation in Canada. You have a little bit of a tug of war here. Ultimately, the drop in inflation could lead to expectations for a massive tailwind for some of the heavyweight financial and Shopify-led tech sectors in Canada. We are definitely at a point of inflection, and it is worth watching.

IBOV Technical Analysis

The Brazilian Bovespa outperformed its peers around the world on Monday, and we will have to see whether or not that plays out on Tuesday. There was a 1.5% drop in the US dollar against the Brazilian Real, and that does help with inflation. This does have also the 50-day EMA offering a little bit of support and while a couple of companies in the oil sector, such as Prio SA lagged due to the drop in oil the other domestic focus sectors like real estate and consumption soared as traders bet that the de-escalation in the Middle East would allow the Central Bank of Brazil to maintain a less hawkish stance.

Brazil could be a good way to play smaller economies, as it has outperformed for quite some time. Therefore, it is a chart that I would definitely keep an eye on. If we were to break down below 175,000 then a deeper correction is imminent.

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