DAX is one of the most popular indexes in the world. It is listed on the Frankfurt Stock Exchange. Virtually every day there is very high volatility which gives many trading opportunities.
Session Summary 28.06.2017
The last two sessions show clearly how markets are dependent on central banks. On Tuesday, Mario Draghi said that the inflation risks are temporary and that they are slowly disappearing. This was immediately recognized as a prelude to the normalization of monetary policy and triggered a strong correction in the equity markets. On the other hand, ECB representatives reassured that no-one is yet ready for a change in monetary policy and that the words are over-interpreted. Stock markets quickly returned to bullish, although DAX did not manage to recover all losses on Tuesday. Nervous market reactions show clearly that the market is very overheated and indeed the only fuel currently is monetary policy of central banks.
Excessive market overvalued are also being warned by Federal Reserve officials. Let us add that these same representatives for seven years maintained practically zero interest rates in the US and pumped trillions of dollars into the financial markets. Nevertheless, he enjoys self-reflection, because a few months ago Janet Yellen and the rest of the FOMC members claimed that the market was not overbought, and it was enough to look at the Shiller P/E ratio, which is higher than in 2008 before the cracking of subprime loans and only two times in history was at a higher level, in 1929 before the Great Depression and at the beginning of the millennium before the bursting of the Internet bubble. Obviously, relying on one indicator is not enough to predict a market crash, but it certainly shows the scale of market overvalued. In a recent interview, the famous investor Jim Rogers warns of a stock market collapse that the world has not seen. Surely there will be people who with a slight smile will come to such information as they approached the warning of the 2008 market crash, the rest is history.
Today the Nikkei index ended the day with 0.45%. Yesterday the S&P 500 also closed the session in positive 0.88% and DAX fell 0.18%, but opened up with a downside gap, so had more to do. The German index set a new record around 12951 points. However, he has not been able to stay on this level for too long. On Tuesday, the index fell sharply in the support area of 12,600 points. In turn, yesterday he recovered some of the losses and jumped over 12700 points. Possible short-term move towards 12800 points and historical levels.
After opening the futures market, the DAX index rebounded from 12700 pts. And is heading towards 12755 points. Descent below 12700 points it will open the way to pivot point around 12650 points.
Key data for the DAX index
14:00 – German Prelim CPI m/m
14:30 – US final GDP q/q