DE30 fights for a key breakout

• DE30 follows Wall Street higher
• Investors dismiss weak retail sales data
• Daimler with a “buy” from RBC

DE30 has been much weaker market so far this year compared to US indices and investors could have been wondering if we see a slow but unavoidable topping out. While that still cannot be ruled out for sure, global rally helped fend-off a sell-off on Friday and today DE30 trades at the highest level since early September. This could be important as a recent rally looked similar to a pattern from the summer where a turnaround at present levels could suggest at least a near-time weakness. Instead, breakout higher could defy this pattern and lead to another test of the 16k barrier. For this reason traders should watch today’s close.

A key breakout could potentially lead to a test of 16000 highs. Source: xStation5

Weak data, no response

Investors were unaffected by the German weak sales data. September sales excluding motor vehicles tumbled 2.5% m/m and was lower compared to September 2020 (-0.9% y/y vs +0.9% y/y expected)! What is more, sales keeps sliding after a post-covid peak in June. This could reflect consumers reaction to inflation which surged to nearly 30-year high.  

German retail sales seem to be under pressure again. Source: Macrobond, XTB Research

Company news:

Daimler (DAI.DE)

Automakers are contributing to today’s rally on DE30 with Daimler (DAI.DE) and Volksawagen (VOW1.DE) adding nearly 2% and BMW (BMW.DE) adding slightly less than 1%. RBC confirmed a “buy” rating on Daimler and while their price target was cut from 108 to 106 EUR, it’s still more than 20% above the current market price. Daimler stock is in a very strong and consistent uptrend. After defending a support line at 67, price surged higher and is traded today at the highest level since 2015.

RBC sees DAI.DE at 106 euros. Source of the chart: xStation5