DAX Index Forecast as Zalando Shares Lead the Recovery

Summary:
• The DAX index has staged a strong comeback as global stocks rebound. It rose to a high of €14,447, which was the highest level since June

The DAX index has staged a strong comeback as global stocks rebound. It rose to a high of €14,447, which was the highest level since June. It has rallied by more than 21% from the lowest level this year. This means that it has outperformed some of its global index peers like the Hang Seng, Shanghai Composite, and the Dow Jones.

Zalando share price leads

Most DAX index constituents have done well in the past 30 days as investors buy the dip. This recovery has been helped by rising expectations that the Federal Reserve will start slowing the pace of its rate hikes. Last week, data by the Bureau of Labor Statistics (BLS) showed that the American inflation eased to 7.7% in October. 

Zalando, the embattled online fashion company, has led the recent gains. The stock has jumped by more than 34% in the past 30 days. Still, the shares are still down by more than 56% this year and by over 63% in the past 12 months. 

The company is facing significant demand challenges even as supply chain challenges ease. Early this month, Zalando said that its active customers rose to over 50 million while it revenue jumped by 2.9%. Its gross merchandise volume soared to 3.2 billion euros in the quarter.

The other top performers in the German DAX are Infineon, Siemens, SAP, and Allianz. All these stocks have risen by more than 15% in the past 30 days. Notably, all DAX index constituents have been in the green in the past month, with Porsche, Covestro, and Deutsche Boerse being the top underperformers.

DAX index forecast

The four-hour chart shows that the DAX 40 index has been in a strong recovery path in the past few days. In this period, it has managed to move above the upper side of the descending channel shown in green. It has moved above all moving averages and the important resistance at €13,943, which was the highest point on August 17.

The DAX index has also moved above all moving averages while the Awesome Oscillator has moved above the neutral level. Therefore, the index will likely pull back slightly as sellers target the key support level at €13,943. A move above the resistance at €14,380 will invalidate the bearish view.