Back in July, we saw the German DAX reach an all-time high of over 10,000. Since then we have seen a decline of over 10%, with a short drop under 9000 at the beginning of August.
In the past week, though, we have seen a gain of over 400 points, so the question is, what's going on? are we heading back to trading at all-time highs or is this simply a brief correction?
What we have seen from the Euro zone in general and from Germany specifically in the last quarter has not been encouraging.
Manufacturing, consumer sentiment and most importantly GDP are all down but the DAX is still poised to make a run toward the end of the year.
Germany is by far the strongest economy in the Euro zone and the latest setback is likely due to its European counterparts, which are slowing down the entire region.
It looks like Investors are betting on further steps taken by the ECB, which Mario Draghi more than hinted at during the last ECB conference, which is causing the optimism we are seeing of late.
I believe that with the traditonally strong performance of the DAX at the end of the year, we will be seeing the 10,000 barrier being crossed again, so I will be going Long DAX.