23.05.2023 – Rebound and triple top or breakout to the upside? Things are getting interesting for the DAX after the new record. We dare to take a look into unknown territory.
Here’s how it can go: Ukraine war, inflation, recession fears, rising interest rates – it doesn’t matter. As recently as September of last year, the DAX was trading at around 12,000 points. But after a month-long upswing, the German share index has just marked a new record high. In the course of trading, the DAX reached 16,333 points on Friday. Now it has reset, here’s a look at the weekly chart. Is the index taking a run-up or is that it? It is clear that the price barometer is moving in unknown territory – uncharted territory.
Source: Bernstein Bank GmbH
For many chart technicians, a new high is a great buy signal. However, the question is whether the German leading index will not form a triple top, which would please the bears. It is interesting to note that the DAX first retraced after the previous price run at the end of 2021 in the wake of a double top. The question is how it will do now.
The bullish factors
Let’s look back first. “Focus Online” cited four reasons for the new bull market: first, the group balance sheets were better than expected. Second, inflation is easing and exports are picking up. Furthermore, energy prices are currently heading south again. Furthermore, the USA is unlikely to descend into chaos in the debt dispute. But there is more.
FOMO
We think: There is apparently a fear of missing out – Fear of Missing out – among big houses. And those who haven’t jumped on the bandwagon now could soon make up for it. Analyst Daniel Saurenz from Feingold Research also sees it that way: “Because many investors, especially professionals, have missed the rally and desperately have to buy after it”. But that is absurd, he says, because the stock market records are facing an enormous headwind from rising interest rates and mediocre economic data at best.
If the upward breakout does not turn out to be a flash in the pan, new highs are likely to be the result, Christian Henke of broker IG predicted, according to Tagesschau.de. “The next stage target would then be the next round number at 17,000 points.”
The arguments of the bears
For Pierre Veyret of trading house Activtrades, this speaks against a further run to the upside: “Stubborn inflation, slowing recovery momentum in China, monetary tightening and weaknesses in U.S. employment data and the banking sector could still be seen as dark clouds for investors,” the market analyst recently warned, according to Tagesschau.de. We add: In the Ukraine war continues to threaten an escalation, Taiwan could also become an explosive crisis. We are curious to see what happens next – and wish you successful trades and investments!
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