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Dax and imminent rebound

Obviously we will see some kind of a rebound tomorrow even the intermediate term trend is about to turn down.

50 day cycle just gave a sell signal.

Dax McClellan Summation Index already made a negative divergence with the underlying index. Currently it is heading down.

It is highly probable that Dax will fall at least below 7200, and then appropriate short term target could be found from a weekly chart. So far Fibonacci level 7037 seems to be enough, maybe even below 7000.

Dax week 39

Dax has had few changes when Lanxess Ag and Continental replaced Man and Metro.

On a weekly chart Dax is still fighting with it's resistance (green descending line). This will soon began to be very tiring and thus increase the odds for the downside.

Dax higher high ahead

Volume index of Dax already reached higher high, which would indicate Dax to close at least above 7500 in a very near future.

Dax 21.9.2012

Today Dax will gap up above 7400, and hence trying to break out into higher levels.

Dax and QE3

Check out the updated gap statistics if we gap up today heavily.

Dax week 37

Will we see all time high soon? The chart is beginning to give an indication of higher high level if the rest of the week continues to advance. Currently we are trying to break above 7400, which would lead to 8000.

McClellan Summation Index indicates that the trend is up.

50 day cycle indicates that the trend is up.

I would like to see 100% of Dax stocks abobe their 50 day moving average before intermediate term topping process.

Only concern is that the current shorter term risk cycle isn't behaving normally, although the current situation isn't normal either. Anyway, market has been pricing QE3 for a while and when we got it, Dax could pullback soon -2-5 %.

Dax week 36

A valid break-out above major resistance levels. Dax could be heading to 6400-6600 range before making a pullback to current level. Anyway, this week is still crucial, especially 7200 support level.

Dax week 34

Dax seems to turn on the bears side. Closing below declining trend line isn't good in this situation. On a weekly chart Dax 6594 seems to be the downside target. Stochastics indicator already gave us a sell sign.

Short term trend is down according to risk behavior. This could mean few down days, then followed by a rebound and then more down.

Longer term trend indicator also gave us a sell sign. 

The mood became bearish, so let's see if there will be some kind of a topping process or a pullback. September has, by the way, been one of the most bearish months in a year. A healthy pullback and Fed announcement of QE3 seems to be the name of the game.

Dax week 33

Dax finished the week above the declining trend line, which we have been watching closely. Stochastics is indicating overbought condition which is not yet a selling sign. The condition could easily last 1-10 weeks.

On a daily basis, technical break-out above the longer term declining trend line was strong and without volume surge. Therefore the break out should not be treated an exhaustion and we will see higher high during next week.

It is expected that all the Dax stocks would climb above their 50 day moving average before intermediate term market top.

McClellan Summation Index is in a strong uptrend.  

Risk behavior has been declining even the index has been rising, so risk appetite should grow next week and lead stocks higher.

Stocks are highly correlated, so the investors haven't been picking the "right" stocks but only following the market trend.

It is obvious that Dax is trying to reach above March high and above 7200.

Dax indicators, regular update

Check out the indicators, where most of them are almost at their highest levels. Still they are pointing up, but soon topping?

Dax technical 6.8.2012

On a weekly candles Dax is soon approaching it's major resistance near 7000 where lies a declining trend line drawn from last year's peak. Additionally, stochastics is indicating an overbought condition. If the market wants to stay positive we could consolidate at these levels or at least the upside potential should be limited?

Dax 25.7.2012

Technical indicators are currently a little bit bearish. MACD lines have crossed downwards and RSI reading is below 50. However, 200 days moving average has served as a support during whole July. 6544 Fibonacci level broke down violently and even Dax is flirting with it's SMA(200) we can still expect 6242 level to be touched.

Shorter term cycle indicator is down and investors are getting rid of riskier assets and stocks.

McClellan Summation Index is also pointing down.

50 day cycle indicator lines also crossed downwards and normally this has meant more down ahead.

US investors seem to have no clue whether to invest or not.

Dax trend and rebound 23.7.2012

Seems like the risk appetite is about to decrease as expected. Chasing high beta doesn't usually last long.

Anyway, longer term trend still seems to point up.

Stock correlation is at unpleasant high level, so diversification won't help now because most of the stocks are moving into same direction.

We already have had a quite strong pullback. It would be great opportunity for a rebound tomorrow.

Dax and risk 19.7.2012

It is highly probable that we will see some kind of consolidation during next 1-5 days. Investors have been chasing high beta so intensively, that the risk cycle has already been topping and thus not letting much room for the upside.

Dax trend 12.6.2012

Looks like Dax has probabilities for opening above 6200 tomorrow. Some of the indicators are already showing some strength, thus suggesting short term / intermediate term trend change.

Dax has been trading more and more riskier stocks. The indicator is currently just above 50 and usually this level has indicated higher levels for the index as well.

50 day cycle is obviously turning to uptrend in despite of bad news.

 Stock correlation is heading to lower levels and giving better opportunities for stock picking strategy.

Trades 6.6.2012

Goes as planned. Added some new long positions: BAS, DB1, LIN, CBK, DBK, HEID, AQU, QIA, SMH, SWV. Short FRE and FME.

The performance of our trades couldn't be better at this point...

Trade ideas 5.6.2012

Looks like the turning point is in hands at the moment. Trading signals already suggest to abandon all short positions and to take long positions for DAX, CBK, HEID, DBK, FRE, SAP, ALV, ADS. Looks like the direction will be up and we will soon accelerate full speed ahead.

Dax, risk and cycliness 5.6.2012

The chart below illustrates a cyclical character of beta. Currently the cycle is down, but it is obvious that we will bottom soon and thus expecting strong rebound for Dax.

Trades 4.6.2012

Continuing with short positions on FME and FRE + short DAX. Today's performance has been awesome.

Banking sector has been performing unusually strong, so watch carefully if there will a strong rebound soon.

Dax stocks and 50 day SMA

None of the Dax stocks are currently above their 50 day moving averages. This is a good sign, meaning that we could reach some kind of a market bottom soon.

Current positions: SHORT: DAX, FME, FRE; LONG: TKA.

Dax 1.6.2012

Classic!

Trades and positions 28.5.2012

Currently short FME and FRE + DAX, long IFX and BEI.

Dax sentiment 24.5.2012

According to indicators, we have a little evidence of reliable market bottom yet. So far the trading range of 6200-6400 has proven to be reliable. Dax hasn't yet touched it's 200 days moving average which is holding the key level near 6200. It is highly expected that we could at least visit 6150-6180 before forming any reliable (tradable) market bottom.

US money flow 24.5.2012

Is this just a rebound or what since it feels that the selling has just about to accelerate?

Dax and trades 21.5.2012

The market is acting as expected. Let's watch this rebound if it is an intermediate term trend turn or just a bear market rally. Overbought and oversold condition is seemingly easening and indicating a nearing bottom. Anyway, Dax could rebound at least over 6400, perhaps 6544 is a decent target.

Dax and risk cycle was already at reasonable level to indicate at least short term trend change.

Check also the other indicators.

LONG: DAX, DCX, CBK, DBK, HEID, SAP, LIN. SHORT: FRE, FME.

Thoughts about Dax and the current trend 19.5.2012

Dax is flirting with the lower bottom of declining trend. Apparently, Fibonacci 50% and 200 days moving average should have their impact on forthcoming week. It could be reasonable to assume the trading range between 6200 - 6400.

Eur-usd rebounded from lower low which was should be very important support. Therefore, we can expect more rebound before testing the low again.

Some of the indicators still point down even the latest behavior of Volume index hasn't been exactly in unison compared to price index (Dax).

McClellan has been quite reliable and clear indicator to reveal longer trends.

Also Overbought and Oversold condition doesn't look like it would turn right now.

Risk behavior suggests that we could soon be nearing the bottom, and so far this indicator is at reasonable level compared to prices and we only need one single day to turn this indicator up.

We also need the high correlation level to lower first before any big trend change could happen.

Overview: The evidence shows that the intermediate term trend is still down, but there are some minor observations in the investor behavior that suggest some hesitation and at least short term rebound. The question remains if the rebound will also act as an intermediate term market bottom. The big question is whether the institutions and block traders shall join this sell-off, and thus driving the prices even lower, since now these major participants have stayed on the sidelines.

Black Friday or Monday?

Markets are on a edge of falling further.

EUR-USD shouldn't fall below 1.26, HSI shouldn't fall below 18000. S&P500 already below 1300, DJI shouldn't fall below 12200. According to money flow of block trades, there hasn't been any major outflows made by big institutions, yet. So far they have managed to keep their nerves. Otherwise we will see more selling and bigger capitulation.

Hang Seng 18.5.2012

Hang Seng is breaking down below 38,2% Fibonacci and long term rising trend line. If the market cannot find any supports between 17.500-18.000 it is going to be a massacre. Obviously it is trying to head below 16.000... 

Dax, correlation and sell-off 17.5.2012

Watch out, rising correlation is one of the worst enemies of  "modern" portfolio theory! Stock picking and diversification won't help your portfolio if the market wants to continue the current sell-off.

Dax technical update 16.5.2012

Ok, it seems obvious that Dax won't stop until it reach 6200. My earlier call was correct.

Exit long position at open and continue with short position and check out the indicators which are still far from pointing a reliable market bottom.

Trades 15.5.2012

FME: LONG; sell at close / next open if new high; PT 55,703

TKA :  LONG; sell at close / next open if new high; PT 16,96

Exit Dax short and take long position.

Few indicators

23% of Dax stocks are still above their 50 day moving average.

Last week we wrote that the stock correlation is in uptrend. Watch out carefully, because diversification doesn't help if it gets too high.

No signs of a bottoming process yet. We need sellers to calm down and more buyers.

If you liked our indicators, you should check this page more often.