With the DAX 30 gains of the last two days being well justified by fundamentals.The very short-term trend is bullish. Traders could add to their long exposure on a pullback to the 11k mark. The analytics predict DAX 30 reaching the psychological level of 11,250. In the long run the price may reach 11,700. The reason for this upbeat outlook is the macro fundamental data of the last days.
Firstly, the German ZEW expectations rose.The expectations for Real E.U. M1 (Money supply) are positive and it should be supported DAX as well.The ECB minutes were dovish. The central bank appears to be doing whatever it takes to boost inflation. This is supporting the DAX, and history over the last few years has shown that the best time to be long stock markets is when the central bank is backing the rally.Look at past Fed QE programs to see how profound the impact was on equity indices. Universal measure of risk for the index is not so high: DAX-Standard Deviation= 1.17(52WK RANGE= 9,219.05/12,390.75).
E.U. inflation bounce back, Brent crude oil remains soft, E.U. unemployment rate is elevated, Draghi doing everything possible to maintain a low exchange rate of EUR and all that determines the direction of the ECB and a longer-term target for Long for DAX.
Problems can arise if the ECB suddenly adopt a more restrained approach, which will push up EUR or by high volatility as a result of external political stress factors.
G.Hristov / Head of Fundamental Analyzes
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