- The DAX has absolutely broken down during the course of the trading session here on Thursday, slamming into the 200 day EMA.
- This is as people had a massive, short covering rally pop up on Thursday.
- This tells me that the massive rally in both the United States, because I’ve done analysis on the S&P 500 today as well, and in Europe was mainly short covering because there was no follow through, and we have just collapsed since then.
It does make a certain amount of sense because it’s not normal to hang on to something like 10 % gains in a day. So, you would expect volatility to pick up. But the question is going to be whether or not the DAX or any of these other indices can find some type of support.
A Few Levels to Watch
I suspect then the 200 day EMA has something to say about that, but the 20,000 euro level is also an area I’ll be watching very closely. If that can’t hold, then I don’t know if anything’s changed other than it was a reprieve. Think of it this way, if you’re a large money manager and you have a lot of money in stocks and you get a chance to get out with a small loss or possibly even a little bit of a gain, after the meltdown, you’re going to press that sell button and get rid of that inventory. Yesterday, after Donald Trump announced that a lot of the tariffs are going to be held for 90 days, he gave money managers around the world a gift, which many of them look like they have taken advantage of. Now we are starting to see how the market is behaving, and it’s not a pretty picture. The question now is whether or not we can build some type of basing pattern in this area. I think the next couple of days will be crucial and I personally don’t think it’s a good idea to be trading stock markets right now.
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