Dax sentiment week 4

Volume returns

Dax has incredibly climbed above it's 200 day moving average. There hasn't been much difficulties to break through resistance levels. Now Dax should have a challenge to climb further above October highs.

Stock performance has been revealing normal short term bullishness for couple of weeks.

Cycles indicator is already quite high, almost 60%. Previousy this high level has indicated topping process.

Trading volume seems to be doubled in two days comparing to previous months, even this kind of volume peaks should have some meaning behind them. It is obvious that some big investors have been underperforming indexes lately and should soon allocate more to stock market. How many believe that this peak in volume means exhaustion or a start of a new bullish trend?

The latest concern was volume index with negative divergence. Ok, this divergence has been corrected in two days.

Even the volume has been strong during last two days, there is one thing to consern: advancing and declining stocks. In despite of strong volume, there actually have been more declining stocks than advancing stocks...

Accumulation/distribution peaked very aggressively.

...only 3 cases when Accumulation/distribution has been this high...

I have been little bit bearish lately because the recent stock market rally hasn't seemed very healthy, because volume has been low and many indicators have been indicating negative divergence compared to prices. It is obious that the rally has partly been a short squeezing. Now the short positions should have been taken out and we will see what will happen next. After all, one should remember that stocks go up by stairs and down by elevator. I personally wouldn't go long at this point. The market is expected to decline a little bit first to attract investors to invest more.

Dax sentiment 10.1.2012

The volume has been extraordinary low. Usually volume drops at these levels only during holidays. So, no-one wants to do anything. Big investors are not willing to sell nor buy. However, on Wednesday we saw volume spiking above it's 10 day EMA.

... but negative TRIN reveals that most of the volume was allocated on declining stocks.

...and it is a little bit annoying that stocks are behaving like this would be a market bottom. Previous times this condition has implied consolidation or decline ahead.

Overview: Gap up + positive daily candle + volume accumulation (even the volume has been low) + negative TRIN = bearish sign? We have seen gap ups lately, but none of them has been runaway gap. Taking into consideration that there will be heavy resistance at 6170-6190 and under these conditions gap up could mean exhaustion gap.

Seems like Dax would need to go lower first if we want to break up. Only very positive news from the economy would give Dax enough interest to go upper levels near 6400.