Handelsblatt: Dax closes to mid-April high – Analysts see bear market rally signal

The German stock market expanded its recent gains on Friday. The German index Dax closed on the last day of the trading week 1.6% higher at 14,462 points, which is the highest of the day. The last time Dax closed at this high was on April 21, notes Handelsblatt.

Friday’s trading could offer new stability. Over the past two weeks, profit-making has started relatively quickly, with the Dax hovering above 14,000. On the contrary, during the trading on Thursday and Friday, it continued to move slowly upwards. The new week will show how sustainable this stability is.

In particular, data from the US create a good mood. Because, according to the US Department of Commerce, although high inflation reduced Americans’ personal incomes in April, annual inflation (PCE core) excluding food and energy expenditures fell slightly to 4.9% from 5.2%.

“It seems that the peak of the inflation wave has passed,” said Bastian Hepperle, an analyst at private bank Hauck Aufhäuser Lampe. Prices on Wall Street have risen accordingly, which has given additional impetus here in Germany.

This raises the hopes of many investors that the US Federal Reserve will not have to tighten monetary policy even more than is already expected. In addition, one or two opportunists are obviously feeling the need to stock up cheaply, said Naeem Aslam, chief market analyst at AvaTrade.

As a result, the climate on Wall Street in particular has improved this week, as it has been declining recently. “The very negative signs of the climate leave room for a bear market rally,” explains Konstantin Oldenburger, a market analyst at CMC Markets. “The start signal for such a rally could have been given this week.”

In the stock market, the bear market refers to a prolonged period of falling prices. The bear market rally refers to the situation in which prices rise sharply again in a shorter period of time before the downward trend returns.

What Oldenburger says: Even if the general situation is difficult with the war in Ukraine, high global inflation, rising interest rates needed to fight inflation and the resulting fears of a recession, Concerns about Corona in China, Dax now had the third positive week in a row.

The week to May 13 had closed with an increase of 2.6%. However, unlike previous weeks, there was no further large-scale gains and Dax maintained its weekly level until May 20 with weekly losses of 0.3%. This week, the index has now recorded weekly gains of over 3%.

The 100-day line is now in immediate range

Thus, the Dax consolidated above the limit of 14,000 units, which it had reached since the beginning of May. It is not uncommon for this to be followed by an upward split. From a technical point of view, the downward trend maintained since the beginning of the year has therefore been permanently abandoned. From the low of May at 13,381 points, the Dax has now fallen significantly.

From a technical point of view, the 100-day line at 14,565 points is approaching, write Ralf Umlauf and Ulrich Wortberg from Helaba in their current analysis. This line shows the moving average during this period and the medium-term trend.

However, the limit of 14,980 points is vital for a real recovery, says Martin Utschneider, head of technical analysis at Donner & Reuschel. An attempt at recovery failed here in late March.

However, the strong end of the week makes the expert optimistic. That signal is “a realistic goal for the coming weeks,” says Utschneider. On the downside, according to Utschneider, the range of 14,041 to 13,871 points offers a reliable stop orientation.

Individual shares in focus

Beiersdorf: The strong business size of the American cosmetics retailer Ulta Beauty encourages investors to enter European beauty suppliers such as Beiersdorf and L’Oreal. Ulta exceeded expectations with sales of $ 2.3 billion and earnings of $ 6.30 per share for the whole year, praises analyst Christopher Horvers of JP Morgan. He said the increased targets for 2022/23 for revenue of $ 9.35 to $ 9.55 billion and earnings of $ 19.20 to $ 20.10 per share were conservative. Shares of Ulta, listed in Frankfurt, rose 14%, more than a year and a half ago.