DAX: Attention – this is the calm before the storm!

Last Updated: 3. Januar 2024By

As the year draws to a close, the DAX has held up well despite ongoing economic downturn and political instability. What does the new year hold in store?

End of year near record highs In mid-December, the index reached near-record highs and, in a moment of euphoria surrounding the European Central Bank’s interest rate decision, even briefly tested the 17,000 point mark for the first time in its history. However, this high was short-lived and could not be sustained, let alone followed by additional buying.

Despite persistent economic downturn and unprecedented industrial destruction in German history, with the automotive industry in particular facing a severe crisis, it is still surprising that the index was able to reach new all-time highs.

It is likely that the strong performance of Wall Street and the prospect of lower interest rates have given the DAX the necessary boost. It is unlikely that the growth prospects for the German economy played a significant role in this. In fact, sentiment has recently taken a turn for the worse.

However, the DAX seems to be running out of steam. For several weeks now, we have seen a sideways consolidation around the 16,800 point mark, giving no indication that it will soon break through and sustainably rise. As a DAX investor, patience is key.

DAX: Warning โ€“ the calm before the storm! Source: aktienscreener.com

DAX facing turbulence at the start of the new year?! But wait, it gets even worse. Based on my analysis, I believe that the US stock market is in dire need of consolidation. At the same time, events in Germany in the coming days (more on that in my next posts) are likely to have a heavy impact on the economy.

The combination of these factors could force the DAX into a sharp correction in the near future. Make sure your portfolios are prepared for this if you are invested in German stocks. It won’t be an easy ride!