The German stock market is closing in on a new all-time high, even as flashing red signs emerge from a popular metric. The so-called "Warren Buffett Indicator," which compares the total valuation of all U.S. equities to the U.S. Gross Domestic Product, currently stands above 200. Historically, this elevated level has often signaled impending market crashes. While any reading above 100 is typically considered overvalued, the indicator has been above this mark for over a year. The core issue is one of timing: the indicator produces as many false signals as useful ones. Currently, investors appear unfazed, as global equity markets are trending strongly upward, and the DAX is on the cusp of setting a new record.
BASF: Is Hope Returning After the Sell-Off?
Last Friday, despite a slight DAX weakness (down 0.18 percent), several individual stocks showed resilience. Merck, Siemens Healthineers, and BASF led the gainers. For the chemical giant BASF, hope is reemerging following a sharp sell-off earlier this year. Technically, the 42 euro level appears to be a reliable fortress of support. This technical optimism is being bolstered by the confirmation of the company's targets through 2028 and positive news regarding the speedy progress of its corporate restructuring. Investors may be positioning themselves for a sustainable turnaround here.
Year-End Rally Kicks Off: How Much Upside is Left in the DAX?
The stage is now clearly set for a year-end rally in the German blue-chip index. Technically, all indicators point toward the seasonally typical final push. This means that new all-time highs are to be expected in the near future. Should these breakouts be accompanied by high trading volume, the DAX could unlock significant additional performance potential before the year ends. The question is no longer if the market will celebrate new records, but how strongly.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Forecasts are not guarantees. Rates may change. Political risk is unpredictable. Central bank actions may vary. Platforms’ tools do not guarantee success.