DAX Sets new All-Time High with Help from China Stimulus

Global stocks rally after yesterday’s announcement of a stimulus package from the PBoC. Fueling hopes for economic expansion in the world’s second-largest economy.

Eurozone and Asian stock markets continued the rally from yesterday as the market sees renewed hopes for increased consumer demand for imports. The DAX is up 1.25%, the NIKKEI225 is up 2.28%, and the Shanghai Index is up 4.77%.

The DAX also set a new all-time with this latest rally reaching a high of 19,170 so far today. Where the index’s largest gainers are Sartorius +7.53%, Adidas +5.24%, and Commerzbank +4.87%. The German bank has been targeted by Unicredit for acquisition.

The announcement was made yesterday, and today several board members of the ECB have given their approval, creating more certainty of the deal going through. The biggest driver is the impact of the stimulus package from China is being felt through the global stock market.

The expansive policies add to the hopes of a soft landing in the U.S. economy and the bullish sentiment on AI technology.

Technical View

The day chart above for the DAX shows a market experiencing a bull trend with price well above the Ichimoku cloud. If today’s candle closes above the previous all-time high of 19,050 (red line), we can consider the bull market is in full swing.

The RSI is trending higher, and we will need to see it above the level of 70 to have greater confidence of the strength of the momentum. The two previous attempts of the RSI to break above 70 failed.

On both occasions, the failure to break above 70 led to major downward corrections. The market has Immediate support on the previous ATH, should that break, the market will find support on 18,785 (blue line).

Using the Elliot Wave count, this is the third wave of the 5-wave series. We can expect a correction lower at some point (4^th wave) to the turn higher past the high of the 3^rd wave on the 5^th and final wave.