The Global Equities are having one of the best quarters in years, many of the global indices are posting new all-time high, while some are still struggling.
This happens despite the fact that there is a lot of uncertainty around the world, whether from the new administration in the US or Brexit and the upcoming elections in France.
DAX 30 Stabilizing Above 12K
For the past few weeks, we were following DAX30 as it was trending gradually after the end of last year breakout above 10700.
Dax has finally broken above the 12K barrier, posting the highest reading since March of 2015, which strengthen the bullish outlook with a high possibility to advance to new all-time high within the next few weeks.
Traders need to be very careful here. First of all, the ECB decision is around the corner, which is supposed to be a disappointing event for stocks, especially if the ECB decides to taper the ongoing QE program.
Yet, this does not mean that the trend might change. The German corporate earnings are still solid and have more potential in the coming quarters, especially with the current improvement of the economic activities.
Looking at the daily chart, the index is supported by the entire moving averages, including 50, 100 and 200 DAY MA. The first immediate MA stands 11669, where buyers are likely to appear. This is in the case of a notable retracement to the downside.
The Weekly chart is also showing a notable improvement, as the 50 WEEK MA is not crossing above the 100 WEEK MA, which strengthens the bullish outlook.
The technical indicators are also solid, positive and far away from being overbought, which means that the current rally has more room ahead.
On the short term, the first immediate resistance stands at 12080, followed by 12130 and 12200.
CAC 40 Rising Despite The Elections
A historic election in France is around the corner. However, CAC 40 is still rising. Yesterday the index spiked all the way above 4900, posting the highest reading since October of 2015 at 4967 until this report is released.
In the meantime, it seems that the French market is getting some political support through the public polls for the elections.
The latest polls suggest that the presidential candidate Fillon would beat Le Pen in a run-off vote by 60% if he makes it to the second round, while Macron saw beating Le Pen by 63%.
These polls are keeping the investors hope for positive outcomes. A positive outcomes means any presidential candidate wins but Le Pen. Why? Because she is campaigning to leave the EU and to get back to its national currency. This is what we are calling it now “Frexit.”
Frexit would be a disaster for the EU and France at the same time, but from the polls, we can guess that this is not going to happen.
— Deutsche Bank (@DeutscheBank) March 2, 2017
However, traders should also be reminded of what happened last year, when polls for Brexit and the US elections were totally wrong, and the outcomes were totally the opposite. Therefore, the current optimism might continue unless Le Pen makes it through.
From a technical analysis point of view, the technical indicators are positive and solid, trading far away from being overbought, which strengthen the current bullish outlook, especially after yesterday’s breakout.
The next immediate resistance stands around 4950 followed by 5000 psychological resistance, which should be watched closely as a break above that resistance would clear the way for further gains.
Otherwise, the first immediate support stands at 4900 where buyers are likely to appear once again.