Key Talking Points:

• Further lockdown restrictions to be announced in Germany
• DAX 30 struggles below 13,800
• It’s a US holiday today so be aware of reduced volumes and liquidity

Global equities are trading a little softer this morning as concerns grow regarding the state of the health and economic recovery and the fact that the markets may have gotten a little bit too ahead of themselves.

Biden’s stimulus announcement on Friday wasn’t enough to bring some extra cheer to stocks as the positive impact of further stimulus was already priced in, whilst data continues to show that economic recovery is stagnating again, with US retail sales coming in lower than expected at -0.7% in the month of December.

It’s a US holiday today so we may see lower volumes but we have a busy week ahead regarding data and earnings season in the US.

US Earnings Calendar

In view of further restrictions in Germany, investors continue to shy away from risk-taking to start the week. The DAX 30 continues to struggle below the 13,800 mark as short-term support failed to hold amid the sell-off on Friday afternoon.

DAX 30 4-hour chart

The fall below the ascending trendline has put further bearish pressure on the index, although there continues to be an upward bias as long as price remains above 13,600. On the 4-hour chart, moving averages have turned downwards and the 20-period SMA has fallen below the 50-period SMA, confirming further bearish pressure mounting. On the other hand, the MACD is becoming slightly less negative and the Stochastic is bordering the oversold line, meaning we could see short-term support hold at 13,680 and a possible price reversion.

A daily close above 13,830 would garner further bullish support in a new attempt to break the 14,000 mark, although overbought conditions remain on the medium term, so further corrections cannot be ruled out.