Markets

October is stormy, DAX vola increases

The DAX graduated with a discount of around one percent (ISIN DE0008469008 | WKN 846900) a typical week of consolidation. Initially, the upward trend of the past week continued, but after the middle of the week sentiment shifted and produced a more severe setback on Thursday. The index recovered somewhat from this, but prices remained below 13,000 points.

On Monday, the DAX initially continued its upward trend up to 13,151, thereby expanding the previous week’s winning streak. But already on Tuesday the first weakness shaped the chart. The DAX fell below 13,000 points intraday and held this level until the end of the day. The picture on the chart looked similar on Wednesday, when we again listed below this psychologically important area. Here, too, this key brand was retained until the end of XETRA.

However, this was no longer possible on Thursday. Right at the start of trading, the corona fear increased again significantly and, in connection with the ongoing difficult talks on the next US stimulus, caused the index to take a significant step backwards. At its low, the share barometer fell to 12,599 points, which is more than 400 points. The prices recovered from this only with difficulty and were able to make up some of the losses on Friday in the wake of a positive Wall Street.

The chart of the week clearly shows the momentum of this movement:

Strong momentum on both sides from Thursday

With the break of 13,000 points on Thursday, the medium-term chart had deteriorated accordingly. This could now be revised again – in the medium term we have walked back to a dominant zone, which is characterized by several price gaps and lows / highs:

Intermediate area change from short to long Intermediate area change from short to long

In particular, the rest of the GAP from Thursday morning is in focus:

DAX-Rest-GAP from Thursday DAX-Rest-GAP from Thursday

A decision should be made in this area at the start of the week. I’ll go into this in more detail in the outlook and every morning by email.

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The listing of the individual trading days also shows an increase in volatility, which is typical for the calendar month October on the stock exchange:

DAX trading days: details of week 43 DAX trading days: Details of week 43

How could the month develop now?

With reference to the previous chart image, not only is a decision area defined in the range from 12,920 to 12,970 points, but also the downward trend line from the high point of the last trading week:

DAX downward trend in the last few days DAX downward trend in the last few days

The DAX first has to cross this threshold in order to enable further potential on the upside. Viewed even larger, the downtrend line from the September high is up for discussion just above it:

DAX downward trend from September DAX downward trend from September

From the current point of view, enormous resistance is to be expected.

In the short term, therefore, either the resistance range is directly exciting for a short positioning or it only makes sense to intervene when the dynamics break. To do this, I will use the trend line from the beginning of this chart analysis:

In my opinion, prices below 12,870 are the corresponding trigger for a further phase of weakness. What are the upcoming dates in the new trading week?

On Monday there will be some speeches from the ECB. In addition to the ECB President, De Guindos, Mersch and Lane have their say. Fed President Powell spoke from the USA in the early afternoon, followed by Williams and Clarida.

On Tuesday, the producer prices from Germany at 8 a.m. are particularly relevant.

Further speeches from the ECB and the FED will follow on Wednesday, as will the FED Beige Book in the evening at 8 p.m.

8:00 a.m. on Thursday, GfK consumer confidence from Germany and then, of course, 2:30 p.m. the report of the weekly initial US unemployment benefits are the numbers of the day.

A new debate in the US presidential campaign is scheduled for Friday. From Germany, the Purchasing Managers’ Index is at 9.30 a.m., the equivalent of the EU at 10 a.m. and from the USA at 3.45 p.m. the Markit PMI for services and manufacturing is relevant.

Further dates and all forecasts are listed in the following overview:

Business dates in week 43 Business dates in week 43

I wish us every success in today’s retail. Your Andreas Bernstein (Bernecker1977)

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and in the forum at this point:

https://www.ariva.de/forum/2020-qv-gdaxi-dj-gold-eurusd-jpy-566939?page=719#bottom

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