Friday, November 18, 2011

Dax indicators week 46

Few points for lower low and higher high

Dax 20-day stock performance has already fallen into negative territory, which would lead to lower lows.

Dax cycles has peaked and giving signal to lower low. However, we could see chobby road ahead, if the investors still believe in Santa Claus Rally. If this would happen, then we will see decline in stocks in January. Look what happened in the end of the years 2009 and 2010. The market kept going up with very low volume. Anyway, it is inevitable, that this indicator will eventually fall below zero and the market will follow.

 Dax overbought and oversold condition has started to go back into "equilibrium". This will lead the index to fall eventually. For long term investors, it would be wise to wait couple of months to see if the market will fall below September lows.

Dax McClellan indicator shows also negative for the index. Usually this indicator has been quite steady and showing the direction clearly. At this point it would indicate down momentum.

However, the volume index hasn't indicated the latest weakness. At the moment, it shows divergence with index. Thus, it is possible, that we won't see any dramatic downturn yet.

Also 20-day performance compared to the index indicates more market bottom than top. Although, this indicator can still go higher and we will see lower market bottom.