DE30 fails at 10,750 pts and pulls back

• European stocks open higher but pull back later on

• DE30 pulls back from the 10,750 pts area

• SAP (SAP.DE) to report earnings tomorrow

Stocks in Europe launched a new week with minor bullish gaps. However, as the time passed the gains started to fade away and now almost half of the European indices trades under the flatline while other trade just slightly above Friday's closing prices. There are no major macro readings scheduled for release today so traders should focus on US stimulus news later in the day.

Source: xStation5

Situation on the DE30 chart did not change much and the index remains within the range of the Overbalance structure. A point to note is that the index broke above 10,750 pts ahead of today's European cash session open - more or less Friday's highs. However, the index quickly pulled back below showing that resistance in the 10,750 pts area is very strong. Should the ongoing correction last, DE30 may be set to test short-term support at 10,565 pts. However, the more important bulls' camp can be found near the 10,500 pts zone, where one can also find a 50-hour moving average (green line). On the other hand, in case bulls regain control and we see a return to a move higher, traders should keep on guard in the 10,750-10,800 pts area.

SAP - earnings to be released tomorrow!

SAP (SAP.DE) is the German software company and DAX member with the biggest weight in the index. In turn, performance of company's shares has the biggest influence on index price moves out of all members. The company will publish its earnings report for Q1 2020 on Tuesday, April 21 (before market open). While software companies are not as exposed to Covid-19 disruptions as airlines or oil producers, SAP has already cut 2020 earnings guidance saying virus has put orders on hold. Headline results (EPS and revenue) should not matter too much and traders should focus on the magnitude of order decline as well as projections for remaining quarters of 2020.

DAX members at 10:09 am BST. Source: Bloomberg

Ceconomy (CEC.DE) said it will suspend rental payments, put employees on a short-time working scheme and apply for state-backed loans. The German retailer said that closure of shops in March caused it to dry up credit lines. The company has reported an operating loss in the second quarter of a fiscal year. On the other hand, the company said that online purchases increased 98% in March.

According to a Reuters report, Volkswagen (VOW3.DE) has reached an agreement with 200,000 out of 260,000 claimants taking part in emission cheating class action lawsuits organized by consumer federation VZBV. 

In other news, Frank Welslch, R&D chief of Volkswagen, said in an interview that the German carmaker has enough SUVs in its line-up. While the company does not plan to scrap SUVs from the development process all together, it has hinted that it may not develop as many models as they used to. The company plans to focus on models that are and can be successful.

Lufthansa (LHA.DE) has almost completed a repatriation flight programme. The last "special" flight is expected to arrive in Frankfurt today. The programme was launched to help German abroad get back home. Lufthansa, just like other carriers, is also using its passenger jets to ship cargo as demand for tickets is almost non-existent.

SAP (SAP.DE) is trading in a very interesting place ahead of tomorrow's earnings release. The stock recovered over 70% of the February-March drop but ran into resistance at 200-session moving average in the €115 area (orange circle). Note that this hurdle also limited upside on Tuesday and Friday last week and could be a strong, technical place to start a bigger pullback. Source: xStation5