The German index did fall to kick off the trading session on Monday, as the yields in Germany continue to be “sticky.”
DAX
The German index did fall to kick off the trading session on Monday, but it is worth noting that we have at least bounced a bit to show signs of support underneath. The 24,000-euro level continues to be an area that I think is important.
Now that we have the 50-day EMA getting ready to cross the 200-day EMA in that neighborhood, kicking off the so-called golden cross, that only adds more credence to the possibility that this could be a sign that we're going higher. Obviously, there are a lot of things happening in the world right now that could really move this market, not the least of which would be the energy situation coming out of the Middle East. After all, Qatari liquefied natural gas not being able to make it to Germany would be a massive problem for the industrial base there.
Economic Policy and Market Sentiments
That being said, it seems like traders are starting to bet on the idea that things will cool off in the Middle East and in fact, there has been a lot less in the way of hostilities recently. That might add a little bit to the underlying demand for the DAX. After all, the Germans are about to throw a ton of money into their infrastructure and their economy, which is something typically the Germans don't do. They're not exactly a government that's known to throw money rapidly into fiscal expansion.
So that makes the DAX an interesting index. In fact, if it weren't for the situation in the Middle East, DAX might be one of the biggest performers I follow. Ultimately, I do think that this is a buy on the dip market, but you have to recognize that the interest rates in Germany being above 3% in the 10-year is a little bit concerning. Eventually once that drops, it will help boost those stocks in the DAX as well. So, keep an eye on the German 10-year yields.