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DAX PERFORMANCE-INDEX (.GDAXI) – Europe to Rebound but Trump Abandons Early Economy Restart Plan

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DAX PERFORMANCE-INDEX (.GDAXI) – Europe to Rebound but Trump Abandons Early Economy Restart Plan

European stock markets are set to open cautiously higher Monday, rebounding after Friday’s sharp losses but weighed on by President Donald Trump’s decision to abandon his plans for an early reopening of the U.S. economy.

At 2:30 ET (0630 GMT), the DAX futures contract in Germany traded 1.7% higher. {{167|France’s CACAC 40 futures were up 0.7%, while the FTSE 100 futures contract in the U.K. rose 0.6%. 

The tone within the market remains one of caution, and futures pared early early gains, as the number of Covid-19 infections headed rapidly towards 750,000 worldwide. The number of deaths from the virus in Italy, the epicenter of the outbreak in Europe, is now well over 10,000, according to data from Johns Hopkins University.

Overnight, President Donald Trump had abandoned his hope of lifting restrictions on the U.S. economy by Easter, extending the current guidance on social distancing to the end of April. Trump said while 100,000 is “a horrible number,” if the U.S. can keep its death toll to “100,000, so we have between 100,000 and 200,000, we altogether have done a very good job.”

Earlier Monday, the People’s Bank of China cut interest rates to 2.2% from 2.4%, the largest reduction in nearly five years, and announced plans to use 7-day reverse repurchase agreements to put  50 billion yuan ($7.04 billion) into the banking system.  

The major European indexes all closed sharply lower Friday, with the U.K.’s FTSE index ending down 5.2%, France’s CAC 40 down 4.2%, while the DAX fell 3.7%. 

There is a lot of economic data coming out of the eurozone this week. Monday’s March economic sentiment data, at 5 AM ET, will offer insights into how businesses and consumers assess the situation, even though the numbers predate new restrictive measures put in place since the survey was conducted.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 10,903.82.

The projected upper bound is: 10,451.07.

The projected lower bound is: 8,473.98.

The projected closing price is: 9,462.52.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

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 71.5703. This is not an overbought or oversold reading. The last signal was a sell 0 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 38.09. 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 buy 4 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 42. This is not a topping or bottoming area. The last signal was a buy 7 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 buy 4 period(s) ago.

Rex Takasugi – TD Profile

XETRA DAX PF closed down -89.869 at 9,542.650. Volume was 93% below average (consolidating) and Bollinger Bands were 194% wider than normal.

Open     High      Low     Close     Volume___
9,725.8809,748.8309,518.2709,542.650 7,987,921
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 9,241.23 11,944.10 12,429.33
Volatility: 81 62 35
Volume: 184,997,488 151,381,536 100,441,240

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 is currently 23.2% below its 200-period moving average and is in an downward 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 bearish on .GDAXI and have had this outlook for the last 24 periods.

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.