The German DAX rose initially on Wednesday, but as we saw on Tuesday, sellers came into the market to start selling.
DAX
This is a continuation of the failure that we saw during the Tuesday session and now I think we are looking at the 24,000 level as a potential support level. If we pierce that level, then we could go further to the downside, but we also would have to deal with the 200-day EMA as well as the 50-day EMA.
We have recently seen the DAX just jump straight up in the air and with that being the case, I think you have to believe that this is a market that eventually goes looking for buyers underneath to pick up a bit of value.
Geopolitical Concerns and Vulnerabilities
The headlines out of the Middle East of course will have a major part to play because there are a lot of concerns about whether or not the Europeans will have energy and industrial components in Germany such as BMW or BASF will be particularly vulnerable if energy becomes a problem. As the industrial machine in Germany drives the rest of Europe, it probably brings Europe down with it.
To the upside, the 25,000 level is an area that I would be looking very closely as it is a large round psychologically significant figure and the scene of a gap lower back in early March. I do think we may eventually try to fill the gap, but we need some type of good news. Peace in the Middle East certainly would be a major driver of that and it is worth noting that the last couple of weeks as things have cooled off a bit in the Middle East, the DAX has reacted positively. We will just have to wait and see how this plays out, but right now I am looking for a buying opportunity on some type of dip.