After a poor start to today’s trading session, the DAX was able to recoup most of its losses and is currently trading in the green. Yesterday the index came under heavy selling pressure primarily due to weak global cues and rising fears of a slowdown in China, which just reported a worse than expected manufacturing output. Strong German PMI results this morning allowed the DAX to bounce back.
According to research firm Markit, the German PMI index came in at a two month high of 51.2. The services sector though came in at a mere 51.4 as opposed to the expected reading of 52.6. Investors continue to remain cautious as falling oil prices and a contracting Chinese economy pose a great risk to the Germany’s economic wellbeing. Investors should tune in to the highly anticipated upcoming release of the FOMC Minutes tomorrow, with many expecting the Federal Reserve to provide some sort of hint pertaining to hiking short term interest rates in the near future. Such a move will surely have strong implications on the DAX.
When looking at the hourly chart for the DAX, the index is finding strong support near the 9275 levels. Meanwhile, its resistance on the upside can be located at the 9592 levels. Additionally, its momentum indicators are still trending lower, which clearly implies that the bears are currently in control. Lastly the DAX’s relative strength index is providing a sell signal and has broken below its important daily moving average.
Short the DAX at current levels for an intermediate target at 9143, with a strict stop-loss above 9440.