DAX PERFORMANCE-INDEX (.GDAXI) Drops As Fears Of Coronavirus’ Economic Impact Grow

DAX PERFORMANCE-INDEX (.GDAXI) Drops As Fears Of Coronavirus’ Economic Impact Grow

DAX PERFORMANCE-INDEX (.GDAXI) Drops As Fears Of Coronavirus’ Economic Impact Grow

In line with other equity markets across the globe, the Dax is declining in early trade. Fears over coronavirus and its impact on the Chinese economy, global growth and trade have weighed heavily on sentiment. 

The number of cases of coronavirus in mainland China has outnumbered the infections in China during SARS in 2002/3. At that time Chinese GDP was at 11% and the economic impact of SARS knocked 2% off the GDP in the relevant quarters.

Evidence is mounting that the deadly virus outbreak is disrupting China’s economy. Economists have started slashing growth figures from 0.3% – 4% as authorities start restricting travel and lock down cities. Chinese New Year is usually a time of huge spending on travel, entertainment, dinning out and shopping. Many companies have suspended their operations and the Chinese will not be spending anywhere near the $145 billion that was spent around the last Chinese New Year.

China is responsible for 15% of global GDP. When China sneezes the rest of the world catches a cold. As we have seen with US – China trade dispute, declining global confidence and trade has the potential to hit exporter nation Germany hard.

German data
Data coming out of Europe’s largest economy this morning hasn’t helped ease the run on German stocks. Germany’s unadjusted employment rate rose in January, 198,000 higher than the previous month and 20,000 higher than a year earlier.
Investors will now look ahead to German inflation data. CPI is expected to decrease -0.6% mom in Jan. US GDP figures could also help drive sentiment. US economic growth is expected at 2.1%.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 13,477.38.

The projected lower bound is: 12,835.94.

The projected closing price is: 13,156.66.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 5 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 27.0728. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.61. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 51 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -177.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 3 period(s) ago.

Rex Takasugi – TD Profile

XETRA DAX PF closed down -187.880 at 13,157.120. Volume was 27% above average (neutral) and Bollinger Bands were 15% narrower than normal.

Open     High      Low     Close     Volume___
13,186.49013,262.18013,118.97013,157.120 100,706,048
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 13,414.24 13,280.60 12,520.37
Volatility: 22 15 17
Volume: 81,754,040 75,217,704 85,549,800

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

XETRA DAX PF gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
XETRA DAX PF is currently 5.1% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .GDAXI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .GDAXI and have had this outlook for the last 16 periods.

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