Dusseldorf The German stock market took a breather on Wednesday. Of the Dax closed slightly at 10,333 points, ending the trading day above the daily low of 10,198 points.
Although the Dax could Key technical chart zone in the range of 10,391 counters rise, but he could not overcome them sustainably. Sustainable means: The Dax should at least be above this mark at the close, better three trading days in a row.
In simple terms, technical chart analysts try to predict the further development of stock prices and stock indices by comparing recurring price patterns from the past with current chart graphics.
The analysts of Landesbank Helaba have past bear market rallies until 1929: Again and again there were counter movements with price increases of 30 percent after crashes on the stock markets. “In seven cases, the prices then fell so significantly that new lows followed,” the experts calculated.
The Dax is currently in a similar situation: Starting from the previous correction low of 8255 points to yesterday’s daily high of 10,590 points, the increase in the German leading index is slightly more than 28 percent.
“Not least because of this, the coming days and weeks promise to be very exciting from a technical point of view,” said the analysts at Landesbank Helaba.
Not unusual, but noteworthy: The price increases of the past two days have been accompanied by conflicting signals. Firstly, the trading volume has been average to below average.
And secondly, the VDax, the nerve barometer of the stock exchange, gone up. This means that professional investors expect significantly higher price fluctuations in the coming weeks. It is not typical. The fear barometer usually falls with rising prices and vice versa.
The VDax was last listed at 46.71 points. A few weeks ago, this value was still at the historical value of 93.30 points. The VDax only signals relaxation when the values are below 20.
Today, Wednesday, Wall Street opened for the third day in a row. The US leading index Dow Jones rose by around one percent to 22,893 points, the broader S&P 500 and the technology-heavy Nasdaq Composite also rose by around one percent, reaching 2685 and 7976 points.
As of yesterday, the US stock exchanges offered no support. The Dow Jones index initially trended more than four percent stronger during the day, but then lost all gains by the end of trading and closed slightly in the red. Investors experienced the sharpest change in trend since October 14, 2008, when the Dow revealed gains of five percent within an exchange session. The Asian stock exchanges tended to be mixed.
Look at the individual values
Shop pharmacy: The online drug dealer has completed a capital increase of 65 million euros. Around 1.12 million new shares were placed at an issue price of EUR 58. The investors’ euphoria only lasted briefly. After the share initially rose over three percent, it closed the trading day with a minus of 3.3 percent. By Tuesday, she had already lost almost seven percent. Nevertheless, the paper is a winner of the corona crisis: it has increased by more than 45 percent since the beginning of the year.
And the course of the share price should remain volatile in the coming weeks. Because hedge funds have increased their speculation on falling prices at the online retailer. In total, four funds have “short-sold” 9.2 percent of all freely tradable shares, as they say in technical terms, and rely on this share for weaker prices.
Vonovia: Despite the corona crisis, the housing group is sticking to its profit targets. Fortunately give Vonovia his annual goals always with a certain corridor, said CEO Rolf Buch of the “Süddeutsche Zeitung”. The stock led the Dax list of winners in the meantime, but was in the middle of the range with a gain of around one percent when the market closed.
Tui: The tourism group has brought its government loan, which was applied for because of the corona crisis, under one roof. Tui has signed the contract with the development bank KfW for the bridging loan of 1.8 billion euros. Like other companies, Tui had to temporarily suspend the organizer, flight, hotel and cruise program. The stock heavily hit by the crisis, which has lost more than 63 percent since the beginning of the year, initially rose by around 10 percent after this report and ended trading with a plus of 6.7 percent.
Tesco: The British supermarket chain does not dare to look ahead to the current fiscal year 2020/21 due to the coronavirus pandemic. It is impossible to predict the impact, the company said. There are high additional costs – especially for the workforce. The share price fell 1.3 percent.
German postal service: The corona crisis is also shaking the logistics company and its global delivery network. The Bonn-based company is therefore canceling its profit forecast for 2020, which it had already marked with a big question mark in February. This burdened the share with losses of 2.1 percent. The Post is already seeing signs of recovery in China. CEO Frank Appel also does not want to respond to the corona crisis by cutting staff.
Look at other asset classes
The EU finance ministers postponed talks over a 500 billion aid package in the corona crisis after a video conference lasting several nights. Calls from Paris and Rome for joint euro bonds to build up after the crisis continue to cause considerable differences of opinion.
That’s why the yields of Italian government bonds with a term of ten years meanwhile increased to 1.808 percent. At the close of trading on Deutsche Börse, they fell again slightly to 1.622 percent. On yesterday’s trading day, this value was now at 1.50 percent. The return on German sovereign wealth funds, on the other hand, fell to minus 0.305 percent after minus 0.318 the previous day.
This postponement also has negative consequences for the euro. The European common currency fell 0.2 percent to $ 1.0865.
The weaker euro and the stronger dollar after the euro finance ministers’ disagreement initially caused the gold price to weaken. Later he was able to recover a little.
No stabilization of the US stock exchanges: “Down risks greater than up opportunities”
According to the foreign exchange analysts, the disagreement among political decision makers in Europe speaks Commerzbank for gold. This would make the ECB step in as a cleaner and buy more bonds. Gold in euros should therefore soon make a new attempt at the all-time high experts say.
Before the meeting of the major oil producing countries There is hope for a reduction in production volumes on the raw material markets. Oil prices rose Wednesday afternoon after falling two days in a row. A barrel (159 liters) of the North Sea type Brent was recently one percent up at $ 32.19. The US light oil WTI cost $ 24.53, a 3.8 percent profit.
“It is now important that the oil price is stabilized in order to avoid unnecessary credit risks amid the already unpredictable negative economic effects of the corona lockdown,” said Jochen Stanzl, chief market analyst at the CMC Markets trading company. Without an agreement, there could be another sell-out on the oil market.
What the chart technique says
The struggle for the important mark of 10,391 points remains because the leading German index failed to overcome it at the closing price. On the bottom there is a multitude of upward price gaps that show how difficult it is for investors to value the market.
Such price gaps arise when the highest price of a day remains below that of the following day. Yesterday Tuesday the lowest price was 10,225 points, the highest price on Monday was 10,097 points. Such upward gaps are important resistance according to chart technology.
“From a risk point of view, this upward price gap is predestined as a hedge,” say the technical analysts at Düsseldorf Bank HSBC. Because if the leading German index falls below the 10,097 point mark, this increases the risk that the index will continue to slide.