Thursday, December 29, 2011

Dax 20 day sentiment

Direction is unclear even a little bit bearish biased.

Many indicators are quite neutral at the moment. So, we are still waiting the break out up or down.

I have noticed that many Dax indicators are quite reliable with a length of 20 day. After all, Dax is a cyclical index according to how it trades, and also the underlying companies depend highly from the growth of the whole world.

When tracking how unique companies have traded last 20 days compared to index, we see that the situation is somehow neutral. 40 % of the companies are performing better than the index. In the graph below I use 10 day moving average to smoothen the indicator. The smoothed indicator is currently standing at 49%.

Still the volume index is leading down, yesterday it made the 20 day low.

Below there are marked all the past cases during last year when volume index has reached the 20 day low. In the short term, the odds are very high that we will eventually see lower close than 5771 during next 5 days. Although, in a little longer term this has also lead to a short term market bottom.