Earnings release today for two major players in the DAX Index. Commerzbank, Germany’s second largest bank, saw a 40% jump in first-quarter operating profit to €300m and its Revenue came in at €2.78bn, up from €2.26bn in the first quarter of 2014 – see full article here.
Siemans had a poor earnings release today with it’s operating profits down 5% to €1.7 Billion and announced further job cuts. The German industrial group said it would cut an additional 4,500 jobs (roughly 1% of global workforce) to the 7,800 administrative redundancies announced in February – see full article here.
This coupled with the poor German factory orders (MoM) coming in at 0.9% vs 1.5% exp. saw the DAX continue its downward momentum from yesterday hitting a low of 11162.
Looking at an Hourly chart of the DAX below, one can see the 11328/11316 zone acted as somewhat of a magnet in trading yesterday with price pulling back into this level on a break above or below. This zone however has been breached in trading today and price has moved to the downside with conviction, the weak data as aforementioned certainly helped fuel this.
(click to enlarge)
CONCLUSION – NEUTRAL
The market is below it Hourly 100 and 200 moving averages (blue & green line in the chart above) which indicates a bearish trend being in place. However to short this market will present some difficulties due to value investors stepping in around 11193/11174 zone, 11100 (also where 100 day moving average resides) and the 11018/10986 zone. Price tested the 11193/11174 zone this morning but failed to close below it (see chart above). Keep an eye on this zone in trading today. The U.K. general election is on today and U.S. Non-farm Payrolls tomorrow – these two key events also add into the turbulent mix currently in european equity markets.
For bulls, buying against the 11194/11174 zone or on a break above 11328.
For bears, shorting against 11328, 11237 and a break of 11162.
Bearish targets :-
- 11162 (Daily low)
- 11115 (Extension in Daily range – 22 day avg. 246 pips & close to Daily S2 Pivot 11121)
- 11018 (Top end of zone & into Daily 100 MA & Daily S3 Pivot 11006)
Bullish targets :-
- 111316 (Bottom end of key zone)
- 11362 (Daily high)
- 11409 (Extension of Daily range)