DAX Index Fundamental Analysis – week of November 13, 2017

The DAX index crashed lower towards the lower part of its range as the stock markets around the world faced a bit of a correction towards the end of the week. The start of the week was pretty much normal as the index consolidated for the first couple of days near the highs of its range and looked pretty bullish and looked as though it might break through the highs of the range.

DAX Moves Lower On Global Sentiment

In fact, there were no signs of the correction as the stock markets around the world continued on their bull run in anticipation of the large tax reforms and tax cuts for the corporates in the US. But it was only later in the week that the news came in that the tax cuts for the corporates was delayed by a year and this was seen as hitting the profits of major corporates for the next 1 year.

This led to a roll back of the move higher that had begun a few weeks back on the back of the passage of the tax reform bill. This led the US stock indices lower and this had an effect on the DAX as well. Germany did continue to have some strong data coming in, including the trade balance but none of this good data had much of an influence on the DAX as it continued to move lower during the second half of the week and this made the DAX to crash through the 13200 region and settle just above the 13100 region to end the week.

Looking ahead to the coming week, we have a couple of speeches from Draghi and also economic sentiment and GDP data from Germany. We do not expect this to have much of an impact on the DAX index but at the same time, we continue to believe that the DAX is still in an uptrend. This makes us believe that the region around 13100 is likely to serve as a strong support for now which is likely to lead to a strong bounce during the course of the coming week.