Talking Points
- DAX is bullish and may reach 11,500 on a better than expected ISM report.
- U.S. ISM Mfg. is expected to print 50.5 from 50.1.
- Caixin China PMI Mfg. improves further, now at 48.3 from 47.2 in Sept.
The DAX 30 is short-term bullish and might reach 11,500 over the next few days as long as it trades above yesterday’s low of 11,241.
If yesterday’s low of 11,241 does not hold, I would expect the DAX 30 to reach 11,148 (a 50% correction to last week’s gains). From that level all the way down to 11k, I would expect swing traders to consider long positions, with stops below last week’s low of 10,871. ISM would need to be truly bad for them to think twice here.
Given the fact that the FTSE 100 is already being bullish in today’s session, I suspect that it will influence the DAX 30 in a positive way as traders begin to witness the DAX catching up with the FTSE.
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Macro Data on Tap
Key data on tap in today’ session is U.S. ISM Manufacturing. The expected outcome according to a Bloomberg survey forecasts 50.5 from 50.1 and with the last few months highlighting soft readings, a level above the 50.1 mark would be considered good for the ISM, and may well spur a rally among stock markets.
If the report breaks the 50.1 low, we may see a pullback, as was the case with yesterday’s Chicago PMI reading (outcome of 48.7 vs. the 54 expected). However, as the ISM covers the whole of the U.S. and not just the Chicago area, a bigger pullback in stock markets on a soft reading may actually be more likely.
Positive news from China as Caixin China PMI Mfg. improves further, now at 48.3 from 47.2 in Sept.
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
U.S. ISM Manufacturing Index
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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