The Trend Remains Bullish, and Traders Keep On Buying Dips
The German DAX is pulling back slightly from the 11,000 mark this morning in London, as the index is short-term overbought. The overall trend remains bullish above last week’s low of 10,680 and traders have consistently been buying dips. I expect this to continue as long as the short-term trend remains bullish. My next target is the August 13 high of 11,160. Traders will probably opt to buy on dips to keep the risk/reward ratio favourable.
U.S. Factory Orders is today’s only market moving data on tap. A Bloomberg News survey forecasts Factory orders to have contracted by -0.9% MoM. We don’t expect this economic indicator to move markets too much. Instead, traders will keep yesterday’s ISM reading along with the better than expected Chinese Caixin manufacturing PMI fresh in mind. In the case of the former, the subcomponents such as new orders and consumers’ inventories are improving, which is causing some economists to forecast a low in the index.
The Caixin PMI index broke its downtrend and posted the biggest one-month increase in 15 months. The index lifted to 48.3 from 47.2 and the balance between new orders and inventories for the Caixin PMI manufacturing index also improved. New orders increased from 46.4 to 48, while the inventory index declined from 52.5 to 50.2.
Upcoming Risk Events (GMT)
- 15:00 U.S. Factory Orders, est. -0.9% MoM
- See Economic Calendar
DAX 30: Will Traders Keep On Buying Dips? Trend Is Bullish Above 10,680
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst
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