Wednesday, December 28, 2011

Dax sentiment week 52

Holiday trading with low volume as usual

Seasonality has been mostly bullish during the last week of the year and Last week I was hoping Dax to re-test 5676-5771. Seems like F-Dax futures tested it before opening. Anyway, the sentiment seems to be cautious. In despite of the cautious sentiment, it is possible to reach 6000 before re-testing 5676-5771.

Dax cycles indicator didn't finnish the last cycle down because of the central bank manipulation. Now we are trading in a range.

McClellan indicator usually behaves quite smoothly, but now it has also been ranging.

One issue to concern is Dax volume index which has been decreasing. Obviously it means that more investors have been selling into higher prices. Now there is a negative divergence, which eventually should lead Dax to lower levels below 5600. This could happen in January. Usually the weeks 2 and 3 are bearish, so the "big guys" who will come back from holiday could re-allocate their portfolios by selling stocks ahead the earnings season.