- The DAX initially rallied during the trading session on Tuesday, but it did give back quite a bit of the gains.
- That’s probably not a huge surprise because we tested the crucial 23,500 euro level only to give back those gains, which this area had been resistant a couple of weeks ago.
- At this point, then you have to ask yourself, are we going to continue to go higher?
Well, we might get a short-term pullback, but there’s literally nothing on this chart that screams that the market is in trouble. In fact, I think the DAX continues to go much higher based on German spending. The German government is about to spend a record amount of money on all kinds of different things, military infrastructure, et cetera, to get things going. And that generally helps the stock market.
Watch German Bund Yields
Interest rates are rising in Germany at the moment, and sooner or later that becomes a problem, but I don’t think that’s an issue yet. Ultimately, this is something that asset holders like because it inflates prices, and that’s exactly what we’re seeing here. Short-term pullbacks make a certain amount of sense. I would expect the 23,000 euro level to be one of interest, followed by the 22,500 euro level.
Out of all of the indices that I follow, the DAX right now is by far, head and shoulders, the strongest one. And therefore, I will continue to look to get involved on short-term dips to take advantage of cheap contracts. Again, I don’t see anything negative on this chart, but if we were to break below the 22,000 euro level, then we might be talking about a deeper correction, but we aren’t going to do that anytime soon. I think we’re more likely to see 24,000 euros than 22,000 euros at this rate.
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