At the time of writing, the DAX index has added another 0.72% loss following yesterday’s slide of 0.88%. Already on Monday, the DAX index tried to trade lower as the European PMI Composite surprised investors by sliding to 50.4 from 51.9 in August, suggesting that the Euro area is nearing recession levels. However, investors ignored the soft economic data, and the DAX index managed to claw back its losses and trade back into the 12302 to 12500 range.
Today, the mood is different as the S&P 500 and Nasdaq 100 experienced sharp losses in yesterday’s session, and have now aligned themselves with the DAX index. European and US stock market indices are now short-term bearish, and suggesting more pain in the days ahead.
The move-in lower in the US stock markets was triggered by a speech by President Trump at the UN suggesting that the US-China trade talks are not going well, and the news of an impeachment inquiry into the President.
Beyond the 12101 level, the next possible target of bearish traders it the 38.20% correction level at 12013 of the rally from the August low to the September high, followed by the September 3 low of 11863, a level that also happens to be the 50% correction level. The short-term trend will remain downwards as long as the price trades below the 12401 level, which is a high from September 23, and if the markets revisit the September 17 low of 12302 then I think traders will see this as an opportunity to short-sell the DAX index.