DAX Holds Gains; Silver Flash Crash and Fed Minutes in Focus today

Summary

• Analyst Outlook: Wall Street dismisses AI bubble fears; earnings growth seen as main driver. Morgan Stanley targets S&P 500 at 7,800 by 2026; Deutsche Bank at 8,000. Bubble risk projected closer to 2029.
• Silver Shock: Silver hit record $84 before flash-crashing 12% to below $74. Reports suggest a major bank liquidation in futures market, possibly UBS. Spike driven by China’s new export controls effective Jan 1; Elon Musk warns, “This is not good.”
• US Markets: Futures slightly lower after peak levels; indices near third straight double-digit annual gain. Monday: all major indices edged down on tech profit-taking; 65.8% of stocks declined. Key event: Fed December minutes at 19:00 GMT.
• European Markets: Stoxx 600 +0.2%, hitting new highs; mining stocks lead, defensives lag. FTSE 100, DAX, CAC 40 modestly higher (+0.2–0.3%). Drivers: metals rebound, geopolitical tensions support safe-haven flows.
• Commodities:
  • Gold: Dropped $200 intraday to $4,350/oz, then rebounded; volatility persists.
  • Silver: Extreme swings post-record high.
  • Oil: +1% on Middle East tensions, Venezuelan supply risk, Ukraine uncertainty.
• Bonds & Yields:
  • US: 10-year at 4.11% (-2 bps); 2-year at 3.44%.
  • Europe: Bund 2.83% (+6 bps); UK Gilt 4.49% stable; France 3.53%, Italy 3.46%.
  • Drivers: US yields ease ahead of Fed minutes; Europe steady on year-end positioning.
• Key Drivers Today:
  1. Fed minutes (14:00 ET) – rate cut tone.
  2. US House Price Index (10:00 ET).
  3. Geopolitical tensions (Middle East, Venezuela, Ukraine).
• Trading Outlook:
  • Equities: Mild volatility; range-bound until Fed minutes.
  • Commodities: Oil/metals volatile; gold support $4,350, silver $71–73.
  • Bonds: Stable to lower yields pre-data; volatility post-minutes.
  • FX: USD modestly stronger (DXY ~98); EUR/USD near 1.18 resistance.
• Next Steps:
  • Dec 31: Last trading day; light volumes.
  • Jan 2026: Positioning, US jobs/inflation data, earnings season, central bank guidance.

DAX Technical Analysis

Germany 40 is trading at approximately 24,417 on the daily chart after testing the resistance zone near 24,482.2, which aligns with the previous swing high. The broader structure shows price moving within a consolidation range between 22,489.4 (major support) and 24,884.0 (major resistance). Fibonacci retracement levels from the recent swing low to high indicate key zones: 78.6% at 24,118.7, 61.8% at 23,818.7, and 50% at 23,634.0. Price remains above the ascending trendline drawn from the November low, but the rejection near resistance suggests potential short-term weakness unless a decisive breakout occurs above 24,482.2.

Momentum indicators reflect mixed signals. MACD is positive but flattening, showing a slowdown in bullish momentum, while Stochastic RSI at 80.69 is just in overbought territory, signaling risk of a pullback or consolidation. If price sustains above 24,118.7, the next upside target could be 24,482.2, followed by 24,884.0. Failure to hold above 24,118.7 could trigger a retracement toward 23,818.7 and 23,634.0, with 22,489.4 remaining the critical support level. The technical bias is cautiously bullish but vulnerable to short-term corrections given overbought conditions and resistance overhead.

Happy new year!

 

-Philip Papageorgiou – Market Analyst
--X ex Twitter: PhilipForexCom