DAX Index Fundamental Analysis – week of February 12, 2018

The DAX index continued to crash lower during the last week, marking the second week when the index had moved lower as the overall pressure on the stock markets continued to dominate the market headlines. The index moved down to the 11600 region as panic gripped the markets but it managed to recover pretty late in the week and close above the 12000 region.

DAX Continues Lower

The index did not have much domestic news or fundamentals to derive its price action and hence it was dominated by what was going on in the other major stock markets. The scenario was the same there as well as the stock markets around the world continued to crash lower for the second week. There was not much news or fundamentals to push the index lower but what seemed to worry the investors was the general feeling and opinion that the stock markets had risen too much and too soon.

This is probably one of the most predicted correction in the stock markets as many of the investors and fund managers had been talking about the overheated conditions in the stock markets for quite some time. The fundamentals have not changed and the Germany economy continues to be strong but those who had made some good profits have been taking most of it off the table and this has pushed the index lower which has snowballed into a major correction as many of the retail traders have also joined in the selling.

Looking ahead to the coming week, we have the GDP and the CPI data from Germany which should bring in some volatility in the DAX index. We also expect the selling to slow down as the fundamentals continue to remain strong and with this in mind, it is likely that buyers might come in at the lows of the range and try and push the index higher. The index should see some selling in the 12300 and 12600 regions in the short term but there should be a bounce in the coming week. We do not expect the bounce to be too strong as the investors and traders would be jittery to invest considering the size of the fall over the last 2 weeks but it should see some choppy trading in the short term.