Reality Check for the DAX: Is a Cold Shower Following the Record Highs?
The premonitions of many market observers have come true: gravity returned to the Frankfurt floor on Wednesday. After an impressive streak of eight consecutive winning trading days, the DAX came under pressure on the downside. While the downward movement remained moderate, the pullback clearly signaled that the air is getting thin beyond the 25,500-point mark. The leading index ended the day down 0.53 percent at 25,286.24 points.
Geopolitical Storm Clouds: Focus on Iran and Greenland
While economic fundamentals have been the main focus recently, global politics are likely to dictate market movements more heavily in the coming days. Reports of a potential government collapse in Iran and possible US intervention are causing uncertainty, as are diplomatic tensions surrounding US interest in acquiring Greenland. Such geopolitical unpredictability is poison for equity markets, as it causes investor risk aversion to spike. In such a volatile environment, defensive maneuvering is the order of the day.
Adidas Defies the Trend – Merck Slips to the Bottom
The individual stock performance on Wednesday presented a study in contrasts. Shareholders of Merck experienced a bitter trading day: with a drop of 1.4 percent, the stock was the bottom performer in the DAX, closely followed by the Mercedes-Benz Group and chemical giant BASF. On the sunny side, however, Adidas managed to hold its ground. The sportswear manufacturer secured the day's victory with a gain of 1.1 percent, demonstrating relative strength against a weakening overall market.
Technical Outlook: Price Action Points to Further Losses
From a technical perspective, the short-term situation has darkened. Wednesday formed a "lower low" and a "lower high" on the chart—a classic signal in Price Action terminology for a continuation of the correction. Investors should now closely watch whether the 25,200-point mark holds. Should the DAX slip below this level, the intraday low from January 9th at approximately 25,100 points will come into focus as the next significant support level.
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