The end of the year is approaching and perhaps many market participants have already said goodbye. There is no other explanation for the low volume and the low fluctuation range that we saw in the DAX this week.
The past DAX week presented itself without a public holiday this time and yet without any great volatility. The individual trading days with fluctuations below 100 points in the XETRA market, with the exception of Monday, can be summed up as very calm. Monday itself was the last trading day of November. As the most successful November in DAX history, this month closed with around 15 percent, making it the strongest month of this year.
At its high, the index reached 13,445 points, its highest level since mid-September and thus only just missed the September high. However, the deep dive into the resistance zone was nothing more than an attempt by the bulls to overcome this area afterwards. It failed and on the following days we not only fell back to the range edge of the last few weeks, but also dived back into this range. The initial profits have not only melted away, but also resulted in a week minus in the DAX. Although only for 36 points, viewed from the high, this movement simply dragged downwards:
DAX weekly movement on the top
The picture was very different in the USA. Here the Dow Jones rose to over 30,000 points and closed on a new record high. The Nasdaq was also strong, with an all-time high at the end of the week.
Anyone who compares both markets could be frustrated. After all, the DAX and Dow have diverged in the last few days:
Direct comparison of DAX and Dow
In the medium term, this will probably level out again, but the poor US labor market data in particular are fueling hopes in the USA of receiving another quick stimulus package here. The market is looking forward to that. In contrast, the dollar is suffering and the euro is rising – a situation that is a brake on the export-heavy index.
In the forum one could read out a low frustration threshold in this regard. How to get around this and why trading shouldn’t be a 12-hour job, I recently learned from Dr. Raimund Schriek in this interview Experienced:
What signals are there in the DAX in the new week?
At a higher level, with prices below 13,300 points, we have again entered the range that has preoccupied us for several weeks:
DAX range in the medium-term chart
In extreme cases, there is a risk of a relapse to 13,020. However, this would have to fall below the lows of the last two trading days. There I apply the short trigger and from there a small recovery trend started on Friday.
Together with the downward trend from the first chart image, the technical situation becomes more acute:
DAX stabilization around 13,220 with Freitgs move
If the momentum turns around again and conquers the 13,300 back, the trigger for a catch-up on the GAP edge from the start of December would be set and, if necessary, the achievement of 13,420 would be taken into account:
DAX signals for new week
In both scenarios I would first wait for the signal, as the relative weakness of the DAX to the other stock markets cannot be overlooked. If the picture in the USA deteriorates after the most recent record run, the DAX could very quickly tend to the downside of the range again.
With a view to the respective preliminary exchange, I am happy to pass on my market opinion by e-mail before 8 a.m. If necessary, register via my blog.
On Monday we mainly look at the data on industrial production from Germany. They are reported at 8:00 a.m. and form the most important Monday date in the economic calendar.
Tuesday we look eagerly at the GDP and the current account in Japan and 11.00 at the GDP from Europe. At the same time, the ZEW survey on economic expectations in Germany and Europe will be published at 11.00 a.m. In the afternoon, there are two other metrics in place, US labor productivity and US unit labor cost.
Wednesday morning is dedicated to the German trade balance. The Bank of Canada is still meeting in the afternoon.
With a view to the central banks, Thursday is exciting. Here the ECB will determine how to proceed from 1.45 p.m. and will discuss its further monetary policy strategy in the press conference from 2.30 p.m. 2:30 p.m. US consumer prices and weekly initial US unemployment benefits are also relevant.
For Friday you should take a closer look at consumer prices from Germany at 8 a.m. and US producer prices at 2.30 p.m. At 4 p.m., the University of Michigan Consumer Confidence closes the number of this calendar week from an economic point of view.
All forecasts for these dates can be found in this table in extracts from:
Business dates for week 50
I wish us all the best in trading tomorrow.
Your Andreas Bernstein (Bernecker1977)
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