During the Monday session, the DAX pullback after the massive move we had seen on Friday. This makes sense, as the buyers would have needed to take a rest after the breakout. We feel that the €7800 level is the breakout point, and as a result we should begin to see support as we fall towards that level. Because of this, we are more than willing to buy this market closer to the €7800 level, or a break of the €7875 level which would represent a new recent high. As far as selling is concerned, we have absolutely no interest in doing so in this market.
The DAX had initially fallen during the previous week, but found plenty of support at the €7600 level in order to bounce high enough to breakout finally. Now that we have broken out, it is obviously you should be buying the DAX market at this point in time. The €7800 level has been violated, and in fact been closed above. This is exactly the type of price action that we need to see in order to be confident that the uptrend is going to continue. With that being said, we believe the bombing at this point in time is a reasonable trade.
We have been stating that the DAX look like it was well supported for the last several sessions, and that a breakout could possibly happen. On Friday, we saw that exact scenario unfold. The market is now well over the €1700 level, and is a very strong buy signal at this moment in time.
Because of this, we are looking for any type of pullback or a break of the Friday highs as a signal to start buying into the DAX. As far as selling is concerned, we’ve pretty much had it made clear to us that it can be done. In fact, we believe that this market will go much, much higher now that we have formed a solid base at the €7700 level.
Dax futures held 7660 on the move lower but we are holding the range of the past 3 weeks in a market that is directionless. Outlook is therefore unchanged for today.
Immediate resistance at 7721/24 then 7750. A break above 7769 should then allow a test of 7795/7805 highs for the month and tough resistance today. Exit any longs and try shorts with a stop and reverse in to longs again above 7815 for 7826 and above here a run to 7896/7906 to take profit on those longs.
Failure to get through 7724/21 could take us to 7701 and if we continue lower look for 7676/70. Below 7660 we could retest the lower end of January’s range at 7640/32 for exiting any shorts. Try longs again with a stop below 7620 for a test of good support at 7603/7593 and an excellent buying opportunity.
The DAX had a strong showing for the Thursday session as we bounced off of the 7675 level again. This area looks very supportive, and as a result it would be very difficult to sell this market right now. In fact, it looks like a market that is trying to go sideways in order to collect it’s breath before going higher. With that being the case, we are very bullish of the DAX, and are more than willing to start buying above the €7775 level. As soon as we get a daily close above that level, we would be long yet again.
The DAX had a fairly back and forth session on Wednesday, as the market continues to meander around the €7700 level. The market is currently consolidating between the €7625 area, and the €7775 level. Because of this, it looks like this market is prepped to go sideways for some time and as a result we are simply monitoring what’s going on in Germany at the moment.
We do believe that eventually the DAX breakout to the upside, but we need to wait until we see a daily close above the €7775 level in order to be comfortable buying at this point. Because of this, we are flat of the DAX right now, but ready to get involved if we see signs of bullishness.
Dax futures fell to the 7640/32 support area where we suggested exiting any shorts and trying longs and this worked perfectly as we bottomed at 7633. We have been stuck in a 90 point range since the start of the month but we have unwound overbought indicators and could be ready now for a break higher.
Immediate resistance at 7721/24 but we could open above here to test yesterday’s high at 7750. A break above 7769 should then allow a test of 7795/7805 highs and tough resistance today. Exit any longs and try shorts with a stop and reverse in to longs again above 7815 for 7826 and above here a run to 7896/7906 to take profit on those longs.
Failure to get through 7724/21 could take us to 7701 and if we continue lower look for 7676/70. Below 7660 we could retest that 7640/32 support area for exiting any shorts. Try longs again with a stop below 7620 for a test of good support at 7603/7593 and an excellent buying opportunity.
The DAX futures fell rather sharply during the session on Tuesday, but found no support at the €7625 level in order to form a nice hammer. This suggests to us that the market still has a very upward bias in it, and as a result we simply will not sell it at this point. If we managed to break above the top of the candle for the session, we think that it could signal that €7775 is finally going to give way. If that happens, we think this market is much higher.
The DAX had a slightly positive session on Monday as we continue to churn around the 7750 level. Right now, it appears that we are simply going sideways and trying to catch our breath after the massive move higher over the last couple of months. Because of this, we think that a trade in this market will be difficult right now as we simply are going nowhere.
However, we do think that a move above the 7775 level would signify that we are going much higher, and would become aggressively long at that point. As far as selling is concerned, there’s absolutely no way to do that as this market is simply far too bullish at this point.
Dax futures have been stuck in a 90 point range since the start of the month as we unwind overbought indicators and we could remain in this range for a while longer.
We could head back to support at 7701 and if we continue lower look for 7676/70 but below 7660 we could retest that 7640/32 support area for exiting any shorts. Try longs again with a stop below 7620 for a test of good support at 7603/7593 and an excellent buying opportunity.
7769 should be very tough to beat again today but if we do push higher look for 7795/7805 highs to be tested. Exit any longs and try shorts with a stop and reverse in to longs again above 7815.
Wall Street exchanges were flat for the week as a poor outlook from tech heavyweight Intel offset a better than expected quarterly profit at Morgan Stanley. Still, the S&P 500 was on track for a third week in a row of gains and remained near a five year high. Shares of giant technology company, Intel slumped 6.7% to USD21.17 a day after it forecast quarterly revenue below analysts’ estimates.
The US Department of Labor reported last week that the number of US workers filing new applications for unemployment benefits dropped to its lowest level in five years last week, the latest signal of an improving Labor market. Initial jobless claims declined by 37,000 to a seasonally adjusted 335,000 in the week ending Jan. 12. Meanwhile, the US Home starts data surged in December as housing continues to boost the economic recovery. Housing starts rose 12.1% last month. That was the highest level since July 2008. The DJIA gained 1.2% for the week, while the NASDAQ gained 0.3% for the week. US markets are shuttered today, for Martin Luther King Day, this year it is combined with the Presidential Inauguration. There is very little on the global eco calendar to change markets today, so it is expected that traders will see a quiet bay.
Across the Atlantic in the EU, stocks were little changed as China’s economy accelerated for the first time in two years combined with retail sales and industrial production climbing higher than expected and a gauge of US consumer confidence, known as the Michigan Confidence Survey, unexpectedly declined. Most agree this is due to Washington news over the fiscal cliff and disappointment that lawmakers have not resolved the issues.
The Stoxx Europe 600 Index retreated 0.1% to 287 at the close of trading. The gauge lost less than 0.1% this week. The equity benchmark climbed to its highest level since February 2011 last week amid speculation that US companies’ earnings would exceed. The CAC 40 rose by 0.9%, followed by FTSE however, the DAX lost by 0.1% for the week. A lot appears to be going right in Europe’s financial markets. Greece is no longer a threat, banks are looking stronger, and government borrowing costs are down. Yet Europe’s economy remains in a slump.
In Asia, Chinese consumer stocks rose in New York and the nation’s largest ETF in the US climbed to a two week high after growth in the Asian country’s economy accelerated for first time in two years. Japan stocks rose, with the Topix Index capping its longest weekly winning streak since 1986, after the yen fell below 90 to the USD for the first time in 2 1/2 years. The Shanghai Composite gained 3.3% for the week, followed by Hang Seng (1.0%), Nikkei (1.0%). However, Kospi fell by 0.44%. All eyes are on the Bank of Japan meeting that begins today, and later in the week Chinese HSBC PMI data will keep traders on edge.
The DAX had a negative week over the last five sessions, but remains consolidating above the €7600 level. We recently broken out from the €7500 level and we believe that this last two weeks have simply been the market taking a rest before its next move higher. Looking at the charts, there’s nothing to think that this market is going to suddenly reverse, and the recent action has certainly been very bullish, going all the way back to this past summer. On a break above the €7800 level, we think that this is a screening buy and would become aggressively long. We also would be buying a pullback that shows some type of support between €7500 and €7600.
The DAX 30 fell during the Friday trading hours as we continue to consolidate between €7775 and €7625. With that being said, this is a very bullish market and quite frankly the massive move higher that we’ve seen warrants a rest at this point. Because of this, we certainly wouldn’t sell this market even if we see a breakdown at this point. We simply believe that the real money is going to be made going long in the DAX, and having said that we are simply looking for buying opportunities only at this point.
We believe that the €7600 level should be the bottom of the support just below, and as a result a pullback to that area would be bought by us with enthusiasm. Alternately, if we managed to break above the €7800 level, we think that this breakout will continue much higher.
The DAX 30 futures market had a strong bounce off of the bottom of the gap that we have just filled. The hammer from the Wednesday session set up the bullish action we solve during the Thursday session, and now it appears that we are going to make an attempt to break out and above the €7800 level. It is at that point in time that we are more than willing to start buying the DAX again, as it would show a breakout and a continuation of the massive bullishness we’ve seen over the last couple of months. We fully anticipate this to happen, but we wait until we get that daily close above the €7800 in order to actually pull the trigger.
Dax futures held inside the previous days range to leave the outlook unchanged with 7700 holding the topside and 7640 holding the downside as expected.
7700 is tricky resistance again today and daily charts have a more negative tone now so we could see the market under pressure again. We could head back to support at 7676/70 but below 7660 we could retest that 7640/32 area. Try longs again with a stop below 7620 for a test of good support at 7603/7593. We would expect a low for the day here and quite possibly for the week if this area is seen so this would be an excellent buying opportunity.
A move back above 7705 however sees 7715/21 then 7740/45. Above here look for 7769 but little chance of any higher today.
The DAX fell during the session on Wednesday, only to fill in the gap that we had seen form two weeks ago. Because of this, we now feel that buyers will more than likely be willing to step into the market based upon this and the fact that the daily candle is a hammer. We think this is a very strong market, and of course wouldn’t short it based upon what we’ve seen over the last two months. With that being said, if we move above the €7800 level, this market could really start to take off.
Dax futures headed lower to fill the gap down to 7640/32. We suggested exiting shorts and trying longs with a tight stop below 7620. The low was 7636 so this trade worked very well as we rallied back up to 7700.
7700 is tricky resistance today and daily charts have a more negative tone now so we could see the market under pressure again. We could head back to support at 7676/70 but below 7660 we could retest that 7640/32 area. Try longs again with a stop below 7620 for a test of good support at 7603/7593. We would expect a low for the day here and quite possibly for the week if this area is seen so this would be an excellent buying opportunity.
A move back above 7705 however sees 7715/21 then 7740/45. Above here look for 7769 but little chance of any higher today.
The DAX initially rose during the session on Tuesday, but fell one quarter of a percent in order to continue the consolidation that we’ve seen since the gap two weeks ago. With this being said we are still fairly bullish on the DAX and believe that the €7600 level should continue to offer significant support. Because of this, we are more than willing to buy this market on the first signs of support, even on shorter-term charts such as the four hour and one hour versions. As far as selling is concerned, we have no interest in doing so until we clear that level significantly on a daily close.
Although the US retail sales added on Friday to signs the United States is recovering, while the borrowing costs fell in Europe last week following the strong auctions, cautious is prevailing as the results of the Greek talks are unclear.
Investors are awaiting the progress of the crucial Greek talks, as the government is trying to reach an agreement with bondholders over the size of the losses in order to avoid a messy default.
Meanwhile in Europe the Euro zone finance ministers will meet in Brussels to discuss the latest offer from private holders of Greek debt, while France and Germany are due to sell short term bonds today.
Data today is absent from both Europe and the U.S., while in Asia volumes were thin as most markets were closed for the Chinese Lunar New Year’s holiday, which marks the start of the Year of the Dragon.
Equities in Asia were mixed today with Nikkei 225 falling 0.01 while the MSCI Asia Pacific Index rose 0.1%. The same goes for the currencies and commodities, while in Europe stocks started the session with losses, where DAX fell 0.24%.
The euro is moving with an upside momentum around the 1.2930 level, the pound is weakening trading around 1.5535, while the yen is weaker at 77.05. However the dollar index is falling trading around 80.20.
While gold is gaining trading around $1670.70, oil is weakening trading around $98.00 as EU foreign ministers will decide today when the embargo of Iranian oil will start, to increase pressures on Tehran to stop their nuclear program.