German index rallies during the week, showing signs of strength yet again

The German index rallied significantly during the week, breaking above the €13,000 level at one point. The 12,007 and €50 level underneath is support, and I think it’s only a matter of time before we turned around us are rallying towards the highs again at the €13,600 level. The DAX of course is helped by a softening Euro, which means cheaper exports coming out of Germany and by proxy higher corporate earnings. I believe that the market should eventually break above the €13,600 level, reaching towards the €15,000 level on the longer term.

Granted, we have been somewhat volatile, and when you look at the chart you can make a case for overall consolidation, but I think the “floor” in the market that you should be paying attention to is the €12,000 level. A breakdown below there would send this market much lower, but right now it doesn’t look likely to happen anytime soon. I believe that buying dips continues to be the best way and adding as the market proves your position to be correct will also be profitable in the longer term. I would not jump in with both feet, but I recognize that we most certainly have an upward proclivity to this market that should continue. However, there’s no need to jump into this market right now as it has gotten so far overextended. I believe that by the end of the year we should see this market test the €1500 level above.

DAX Video 14.05.18