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Can Porsche help DAX form “golden cross”?

Since being listed in late September, shares of this luxury carmaker have soared by 28.2%.

For comparison, since its IPO, Porsche’s share price gains have been far higher than:

  • Ferrari’s 16.6% advance
     
  • EURO STOXX 50 index’s 17.6% climb

(for the period since September 29)

Within a week of its September 29th market debut/IPO, Porsche has become Europe’s most valuable automaker, even surpassing the market cap of its parent company, Volkswagen AG.

Porsche is also Europe largest carmaker by revenue, despite its 300,000 annual deliveries being dwarfed by VW’s sales of about 10 million vehicles per year!

And to add another feather to its cap following its successful debut on the stock market, Porsche is set to be added to the DAX starting Monday, December 19th.

 

What is the DAX?

The DAX is Germany’s main stock index, measuring the performance of the country’s 40 biggest listed companies.

The DAX is also a popular benchmark, tracked by some EUR 14 billion worth of exchange-traded funds (ETF).

 

How could Porsche’s inclusion help the DAX?

Any member of the DAX that can outperform the rest of the European stock market should help support the broader index.

After all, German stocks could use all the help it can get.

Can Porsche help DAX form “golden cross”?

The DAX has eased lower this month, after rallying by as much as 23.8% since early October, paring its quarter-to-date gains down to 17%.

Such price action reveals that there have been enough bears (those hoping prices would go down) congregating around this mid-14,000 region.

After all, the bears were out in full force around the same region back in June as well, exerting strong resistance on the DAX around the 14,700 mark.

The selloff dragged this index down for most of Q3 2022, even hitting a two-year low and breaking into sub-11,800 domain before the Q4 recovery.

And to be fair, the DAX’s recovery so far in Q4 is noteworthy  in light of the economic woes still facing the Eurozone.

The threat of a potential energy crisis still hangs over Europe’s head, while the Ukraine conflict is still raging off to its eastern borders.

Still, bulls are hoping that the worst is now over for the DAX, though such a belief may require the formation of a major technical event.

 

Enter the “golden cross”.

The DAX’s 50-day simple moving average (SMA) appears on the cusp of crossing back above its 200-day SMA.

Such a technical event typically heralds further gains.

And the DAX may have to bide its time before forming that highly anticipated ‘golden cross’, with perhaps Porsche’s December 19th inclusion helping to tip it over the line.

If stock investors continue gravitating towards Porsche’s lustre, that could help offset the macroeconomic woes surrounding Germany, while potentially help tip Germany’s benchmark stock index over the line and forming that ‘golden cross’.

Such a double-boost (Porsche inclusion + golden cross formation) would certainly be greatly welcomed by DAX bulls in seeing out 2022 with a bang, in what’s been a bruising year for stock markets worldwide.

 

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