We saw a strong weekly end on the DAX. Is this the prelude to more sunny stock market weather in June?
Monday was almost anchored in the DAX for a bridging day, as there was no trading on Wall Street. Memorial Day was a US public holiday that let the DAX slip out of May. The calendar month thus ended in a profit and without the “horror” of a “sell in may” for investors.
June got off to a correspondingly euphoric start. On the first trading day of the new month, the DAX worked its way to its all-time high and exceeded it by more than 100 points. With 15,685 points, a new record was set on Tuesday, which was the benchmark for the index on the upside until Friday.
A few minor corrections over the course of the week and a wait-and-see look at the US labor market outlined further developments this week. The balancing act between economic recovery and moderate growth that the stock markets need for further growth was struck quite precisely. The emerging interest rate discussion, which would be negative for many companies if the economy was too strong, could thus be postponed again for the time being.
In total, the DAX rose every day in June in this environment, marking a new record high on a closing price basis and, at 15,705 points on Friday, even another all-time high in the course of the day. That was almost typical, because even in the last trading weeks, the second half of the week was always the “stronger” one:
DAX again with a strong second half of the week
So the “chance of breakout” from the last weekly analysis has become a reality (review):
DAX highs remain in focus
The volatility decreased significantly during this trading week, as did the trading volume. Because in some federal states there was a public holiday on Thursday with “Corpus Christi”.
This is how the individual trading days in June have been outlined so far:
June trading days in the DAX
The GAP on “Memorial Day” and the end of the month in May, the last minus day in the DAX, so to speak, is still open. We’ll keep this fact in mind for now until the market approaches this area again:
Last GAP in the DAX
In the medium term, the German share index can be certified as a successful continuation of the recent upward trend. As a trend channel in the hourly chart, this is visually very nice to look at:
Medium-term trend channel in the DAX
Higher lows and new records on the upper side surround this event, in which of course there were always opportunities for a consolidation trade. Former highs are started again and again and also examined from the top as a re-test. This could also become the determining pattern for the new week:
New record high in the DAX
I will now go into more detail in the outlook.
The DAX is also higher in its larger upward movement, which was already shown as a trend channel in the hourly chart. Two trend lines, one from the end of January and the other from the beginning of May, are the support lines:
Trends in the “Big Picture” DAX
On the underside, they offer corresponding support in the chart image and at the same time are also possible targets if a deeper consolidation sets in.
Back to the short-term chart image, from which the corresponding trades are then worked out. There I outlined the first consolidation goals. They are based on the former all-time high at 15,685 as a trigger, Wednesday’s highs as the first and its lows as the second target:
Zones for consolidation in the DAX
If both zones do not hold, the GAP on “Memorial Day” is exciting again, which was sketched in the chart at the beginning. In the interests of a sustained upward trend, the consolidation should be completed there at the latest. This is the only way to keep the summer sunny for investors. The overriding principle is “The trend is your friend” and, in the case of ideas for investing, also the search for individual shares, which I developed and discussed in the community, for example (NEW: Registration for this section as a newsletter).
A more detailed DAX picture will surely result tomorrow from the preliminary exchange. I will update this accordingly in the DAX outlook by email to you. After that, I am in the daily stream on Twitch together with other traders to see and open to your questions:
Please pay attention to the following dates in the new weeks.
In this section I have summarized the most important dates for the coming week. This view is available in detail for each trading day with further detailed data.
There are no public holidays and therefore there are dates every day that you as a trader should pay attention to. Starting with the work orders from Germany on Monday at 8 a.m. and the Sentix investor confidence at 10.30 a.m. at the EU level at 10.30 a.m., the stock market week starts quietly.
On Tuesday, industrial production from Germany will be published at 8 a.m. and then the important gross domestic product of the EU at 11 a.m. at the same time as the change in employment from the EU labor market. In the afternoon, 2:30 p.m., further US data is on the agenda with the US goods trade balance, the Redbook Index 2:55 p.m. and the JOLTS job vacancies 4:00 p.m.
On Wednesday at 8 a.m., the current account balance from Germany, combined with the import and export data, follows. More US data is available with wholesale investors at 4pm.
The ECB plays the dominant role in the course of the day on Thursday. Little movement is expected for the interest rate decision at 1:45 p.m., but it can become more volatile again for the press conference at 2:30 p.m. At the same time, the US initial jobless claims and the US consumer price index are on the agenda.
Friday starts at 8.00 a.m. with the wholesale price index from Germany and then only gets exciting again at 4.00 p.m. with the US consumer confidence of the University of Michigan together with Reuters.
All dates mentioned are listed here in a table with the forecasts of the analysts:
Economic data from June 7th, 2021
I wish us all the best for the start of trading on the German stock market tomorrow.
Also available as a YouTube video:
Your Andreas Bernstein
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