The German DAX index began the trading session with modest gains, opening at 46,622 points, but this early optimism proved short-lived. Before the close, the benchmark had plunged to a daily low of 46,271 points, representing a 0.5% decline from the previous day’s finish. Market volatility climbed to 16.39 points during the session, while trading volumes reached 20.44 billion shares, slightly exceeding the 20-day average.
Conflicting Signals from Monetary Policy and Commodities
Investors are navigating significant uncertainty as the ongoing US government shutdown continues to withhold crucial economic data. Meanwhile, the Federal Reserve’s inflation concerns directly conflict with market expectations for interest rate reductions. While interest rate futures currently indicate a 94% probability of a rate cut this month, Fed Governor Michael Barr has cautioned against premature policy moves.
The US dollar strengthened by 0.5% to 99.44, creating additional pressure on equity markets. Even traditional safe-haven assets showed weakness, with gold dropping 2.4% to fall below the psychologically important $4,000 threshold. Oil markets also experienced declines, trading at $61.50 per barrel before recovering slightly to $62.67.
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Technical Indicators Flash Warning Signals
The DAX is currently testing the critical 100-day moving average at 46,660 points. A decisive break below this level could open the path toward the 200-day average positioned at 46,143 points. More concerning to technical analysts, the Relative Strength Index has already fallen below the neutral 50 mark. Since October 3rd, the index has been forming a pattern of lower highs and lower lows—a classic technical configuration that typically precedes further declines.
Key technical levels to monitor:
– Support zones: 46,500 / 46,000 points
– Resistance level: 47,000 points
– 50-day exponential moving average: 45,799 points
With limited data transparency and conflicting signals emerging from both interest rate and currency markets, the question remains whether the DAX can defend its crucial support levels or if investors should prepare for further downward movement. The current technical and fundamental landscape offers little room for optimism in the near term.
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