The DAX index had another bearish week as the uncertainties and risks continued to cloud the judgement of the investors and made them want to stay away from the European stock markets. This was a common phenomenon seen all across Europe where we saw all the stock markets being impacted by the talk of tapering. This seems to be the dominant deadlines for now and unless there is another fundamental or news event that will push the DAX in a specific direction, we should see the DAX index continue to be under pressure.
DAX Slips Slowly Lower
Though the talk of QE tapering has subsided a bit now and the market has reconciled itself to the fact that it will only be after summer that any news of tapering would be released from the ECB, the spectre of tapering continues to dominate the DAX. Over last week, we had some strong data from Germany but ironically, such are the times that any strong economic data would only lead a weakening of the stock markets. This is a pretty unusual behavior which has come out due to the fact that stronger economic data would make the choice of the ECB easier with regards to tapering.
So, if tapering happens, the ECB would no longer pump in funds into the stock markets and thats why we are seeing the surprising dump in the stock markets despite good data from Germany and other parts of Europe. There was no bounce to speak of, in the DAX last week and it was more of consolidation and slow and steady move lower.
Looking ahead to the coming week, we do not have any major economic news from Germany but there is the employment data from the US which is likely to resonate all around the world and hence likely to have an impact on the DAX. We have seen the index close below 12200 for the week and hence we can expect a gradual weakening towards 12000 during the course of the week. The weakening is expected to get slower and slower as we come across some strong support regions where a lot of buying is expected and so dont be surprised if…