Dax, unstoppable

We have one of the longest bull market ever. The stock market index is peaking and some of the indexes are breaking historical maximums. Is this related to the improvement in the economy? Well, it’s true that the economies, in general, have improved but it has been a supported move by the central banks. I’d like to know what can happen if the central banks retire the stimulus and the consumption doesn’t improve. Anyway, this is not important at the moment but I like questioning myself at least to be prepared.

This is the YTD change of some of the biggest indexes around the world:

Index	YTD change (%)	Close
S&P 500	13.66%	2544.73
Dow Jones	15.17%	22761.07
Nasdaq	22.23%	6579.73
Eurostoxx	11.35%	7247.63
DAX	13.02%	12976.4
Nikkei	8.25%	20823.51
MSCI Emerging Markets	29.09%	493.84

Own elaboration

As you can see,  buying and holding in the beginning of 2017 would be a great decision. Are the markets raising because everyone is investing in Exchange Traded Funds(ETF)?

Dax

    Source: TradingView, Dax index futures, daily

We can see a strong bullish trend from the beginning of the year until the middle of Jun, where it retraced a little bit. It has been rising almost every day since the beginning of September. It tested two times the 200 EMA (exponential moving average) but it failed to close two times under this indicator. The most important levels are the following:

Support 1	12799.5
Support 2	12278.0
Support 3	11912.5
Support 4	11465.5

   Source: TradingView, Dax index futures vs EURUSD futures, daily

Germany’s economy is based on exports, this is why they get the advantage of a cheap Euro related to other currencies. You can see this relationship above. When the euro became expensive the Dax got stuck for a while. The buyers came to the market after the German election result lifting the Dax in the last weeks.

These are only a couple of insights, some of them are not valid for day trading but I like to have a picture of the fundamentals (as well as the technicals).  I hope it helps. I don’t know when the market is going to stop rising. There are some risk in the current economic cycle such: the rise in the protectionism and populism, a massive build-up of debt, the change of economic policy in central banks (tapering and the way to increase interest rates without affecting too much the borrowers), the high price of assets. I hope it helps.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved