The Dax overcame the neuralgic zone at 13200 points on Friday – there were tops at this level of the bears, which were then overrun with subsequent further increase in the German leading stock index. But then the follow-up purchases were lacking, while the US labor market data was in line with the headline number of new jobs, but less pleasing was the renewed disappointment in US hourly wages, which fell short of expectations. So the Dax put the reverse gear and fell again below the 13200 mark.
But now the Dax has to watch that he succeeds in what was not successful on Friday: To confirm the break of the 13200 mark and thus pave the way for the much-sung year-end rally. Or has this rally been anticipated this year, so is the powder spilled?
Anyway, be careful from a seasonal point of view, the time until mid-December is often quite bumpy. And there is a lot going on this week: Most notably the Fed decision with the very likely third rate hike this year, followed by Janet Yellen’s last press conference. The ECB meeting and the decisions of the Bank of England, and the SNB in Switzerland. So this week there will be a lot of action, before then probably from next week, the air should be largely out.
However, there are still some risks from the political side: US House of Representatives and US Senate must agree on a common version of the US tax reform, both chambers will then vote on this common version. And there is a considerable amount of uncertainty in this, as the versions differ quite considerably: the version of the US Senate, for example, does not foresee the lowering of the US corporate tax rate until 2019, which would be a disaster for Wall Street. In addition still problematic issues such as the Alternative Minimum Tax or the FIFO rule – this problems have to be fixed!
Today is likely to be a rather quiet trade, because everything that is really relevant, will happen later in the week. Now the Dax must show that he has really overcome the downward trend with descending peaks and can confirm the recently established uptrend with even higher highs. Therefore, a break of the 13100er mark would be negative, while on the upside with crossing the Friday high at 13245 points the traffic lights would turn green!