German index quiet to start the week
The German index rallied initially during the day on Monday but pulled back ever so slightly to break below the €13,100 level. Ultimately, I think that the market will probably make a fresh, new high, but it’s going to take a significant amount of momentum to finally go much higher. I believe that the market has quite a bit of support at the €13,000 level, and that the bottom of the uptrend is probably found closer to the €12,750 level. Ultimately, I look at pullbacks as a buying opportunities if we can stay above that level, and I think that the market will more than likely do so, and plan on building a larger position.
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Longer-term, I anticipate that this market will go to the €15,000 level, but it is going to take quite some time to get there. Look at this is a market that is going to benefit from a shrinking Euro over the summer, as the US dollar has been strengthening drastically. The interest rates in America rising of course has put upward pressure on the greenback, and that by default has put downward pressure on the Euro, causing German exports to be more appealing around the world. This could also help with corporate earnings in Germany as well, so that should continue to help this market. With a very soft ECB, buyers will continue to look to Germany to play the European Union and the value that it stocks are offering foreign traders.