Is it as easy as “So Goes Germany, So Goes Stocks In The States?” Well, I wouldn’t go that far. Often times over the past 15-years, how the DAX index performs seems to send an important message to stock in the states.
This chart looks at the DAX Index on a weekly basis over the past 25-years. The DAX index has remained above the rising support line (1) since it started forming at the 2003 lows. When the DAX hit this line in 2009 and 2011 as momentum was deeply oversold, solid rallies took place.
The decline last year took the DAX down to test 10-year rising support as momentum was the most oversold since the 2009 lows at (3).
The DAX is moving higher of late off the triple support test at (3). Keep an eye on the DAX as positive price action often sends an encouraging message to stocks in the states.