- The DAX futures opened on the front foot and hit a high of 10,707 before sentiment flipped. The index ended off by -2.4%.
- Markets are mixed in thin holiday trade, with mixed sentiment surrounding Sino/US relations and the health of the global economy.
- Subsequently, we have seen vicious moves in global stock prices and with the Europeans coming back to a full day of trade, there was momentum on the moves that saw heavy supply hitting the screens as US futures buckled.
It is hard to conclude what that markets are running with, but extreme pessimism over Sino/US relations and global growth have set in while the Fed remains a spanner in the works given their own concerns over global growth yet intent on hiking rates on data dependent autopilot mode which makes for a toxic cocktail leaving a bad taste in the mouths of investors.
The incredible turn around we saw on Wall Street can be put down to oversold prices, thin trade and the herd mentality of the trend followers grasping at straws of positive noise to cash in on following the worst performance in stocks in December since the Great Depression.
There are still some days to go, which could mean that all the cash the big funds have been hoarding could be reallocated to stocks before the year is out, but that rally would likely be a short-term phenomenon than anything sustainable given the number of headwinds traders are so pessimistic about going into the New Year – As it stands, about 70 percent of the stocks in the S&P 500, (the global benchmark for equity prices), are in a bear market with the index moving into bear correction territory – 20% off from its high.
DAX best and worst
As for the DAX, losses in the Food & Beverages, Financial Services and Utilities sectors led shares lower. The DAX declined 2.37% to hit a new 52-week low. Fresenius Medical Care lead the performers which fell by just 0.21% or 0.120 points to trade at 57.060 by the close. Meanwhile, SAP SE fell 0.73% or by 0.630 points to close at 85.790. The worst performers were Merck KGaA dropping by as much asl 4.46% or 4.16 points to 89.20 while Vonovia SE fell 4.29% or 1.78 points to close at 39.70.
DAX levels
Bulls need to get back above the 23.6% Fibo of the 2018 range at 11065. Below there, the index remains offered and can target 10211 and 9938 as the next weekly pivot points to the downside. However, RSI is oversold will little room to go until meeting support and Sep 2011 lows. MACD has moved beyond its support and price is vulnerable to an upside correction.
- Support levels: 10211 10018 9938
- Resistance levels: 10646 10809 11082
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