Sunday, December 11, 2011

Dax sentiment December

Short term bullish, but still need to treat this a bear market rally

Few short term (statistical) bullish points for the next week:

- Friday's big gap down was filled and the day turned very positive (bullish)
- Accumulated block trades money flow turned positive (bullish)
- Dax closed the week negative -1,55%, while S&P 500 closed positive +0,88% (bullish)
- 20 day stock performance indicates bullish trend
- Dax cycles is on the positive side

Bearish (intuitive) point of views:

- "Bigger" picture still bearish, because the declining trend line hasn't been broken
- 6200 - 6244 should be important resistance level for the next week
- 6500 would be even more important resistance level for the rest of the year
- If the above levels couldn't be broken during a month, the probability for reaching the low target 5568 will rise
- Weekly seasonality for the week 50 is not so bull-friendly
- Lower low in volume index would indicate lower low for the price index (not filled yet)

In the US, 5 day accumulated money flow turned positive since it turned into negative territory 8.11. Positive money flow among "the big players" almost guarantees S&P500 to gap up on Monday. So, the probabilities are on the bulls side. This it will probably also give some bullishness to Dax.

Trend in the stock 20 day performance is up.

43% of individual Dax stocks are trading better than than the index. Decline in this indicator means higher levels for the Dax. In normal circumtances, I would expect this indicator to fall at least below 40%.

Dax overbought and oversold cycle indicates that the selling is over for now. Normally this indicator would have fallen to a more extreme conditions, but obviously not at this this time because of the manipulation and the seasonality.

Volume index made lower low, and is showing negative divergence with the price index, which is not so good sign for intermediate term.

Dax will face some serious and very important resistance levels for coming days. Break above the declining trend line would squeeze out some short positions and encourage bulls.

Short term view:

Intermediate term view:

The bottom line: statistics will give bullish view for the short term, but one should still remain cautious for intermediate term.