German DAX Weighed Down By VW Scandal And DB Concerns

James Bartelloni

Germany is extremely important right now. And in market terms, that means the German DAX stock market. In the past couple weeks we’ve seen Deutsche Bank’s stock come under pressure and digested the VW Volkswagen scandal. And this has brought back Euro concerns.

I also suggest that you read my post on storm clouds around Deutsche Bank stock from this weekend.

Now let’s take a look at the German DAX. If you take a quick gander thru the components of the German DAX, you’ll find that Volkswagen (US ticker: VLKAY) and Deutsche Bank (US ticker: DB) are big players. The two companies make up a measurable part of the employee population in Germany, employing north of 650,000 employees combined.

Here’s the chart picture for Volkswagen AG:

volkswagen vw stock september decline_vlkay chart

Technical notes on Volkswagen stock:

  • Note – if we close (on a daily basis) below 24.30 then Volkswagen is likely in big trouble.
  • Also, again, note the power of square roots – the gap is a “perfect” size of the square root of the close before it occurred.

Any way that we look at it – $DB and $VLKAY are under significant stock price pressure.

So what does this mean for the German DAX?

If you look back at my posts on See It Market you’ll see that the 10,000 level was a “big deal” and the fact that we are currently closing below it tells us that prior patterns weren’t bullish, at all.

For broader perspective, let’s look at the monthly chart of the German DAX (see below). You can see a very powerful “cluster” of math lower yet. That’s another 33 % percent lower. Right now (in this environment) this is a realistic target.

german dax stock market targets lower chart

Thanks for reading and careful out there.

 

Twitter:  @BartsCharts

Author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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