Thoughts about Dax and the current trend 19.5.2012

Dax is flirting with the lower bottom of declining trend. Apparently, Fibonacci 50% and 200 days moving average should have their impact on forthcoming week. It could be reasonable to assume the trading range between 6200 - 6400.

Eur-usd rebounded from lower low which was should be very important support. Therefore, we can expect more rebound before testing the low again.

Some of the indicators still point down even the latest behavior of Volume index hasn't been exactly in unison compared to price index (Dax).

McClellan has been quite reliable and clear indicator to reveal longer trends.

Also Overbought and Oversold condition doesn't look like it would turn right now.

Risk behavior suggests that we could soon be nearing the bottom, and so far this indicator is at reasonable level compared to prices and we only need one single day to turn this indicator up.

We also need the high correlation level to lower first before any big trend change could happen.

Overview: The evidence shows that the intermediate term trend is still down, but there are some minor observations in the investor behavior that suggest some hesitation and at least short term rebound. The question remains if the rebound will also act as an intermediate term market bottom. The big question is whether the institutions and block traders shall join this sell-off, and thus driving the prices even lower, since now these major participants have stayed on the sidelines.

Dax indicators 10.5.2012

Even I wrote that the short term is up, the intermediate term trend is down. Yesterday volume index made lower close while Dax close higher. 70% of cases this has indicated lower lows for Dax. Check out my other indicators as well. They are easy to interpret and currently seemingly pointing down.

Bearish dax 9.5.2012

Volume Index has been leading the way down. It already went below 27.10.2011 highs, which I have to read careful since it can indicate lower lows for Dax.

It also seems that the sellers haven't been satisfied yet.

The indicators with daily updated close values can also be found here.

Trades 7.5.2012

The latest trades have been working better than expected. Also taking long position at the European market open has proven to be exceptionally profitable trade. However, there is still a divergence between volume and prices. The models suggest to hold CBK-DBK-HEID for tomorrow + short FRE-FME + sell index long positions tomorrow European market open and tomorrow's US market open.

Volume index 4.5.2012

Volume index trying to make lower lows and thus suggesting Dax to dive under 6500.

Dax indicators 27.4.2012

In addition to pure technical view, all of the indicators point to higher high.

20 day highs vs. lows pointing up.

Intermediate Dax cycles pointing up.

Dax volume index already made a fulfilled forecast to a climb above 6800. 

I have seen arguments that the average volume has been low, but I cannot see any point in that since the volume seems to be decent.

Dax risk indicator has became quite high. Previously when this indicator has climbed above 70, there hasn't been much room for the upside. It is still expected that Dax could touch 7000 before consolidating. 

3 month's biggest gainer is Man (+20,3%) while the biggest loser is Metro (-20%). At the same time Dax is up +4%.

Currently the correlation between the stocks and index is lowering, which is a good for stock picking and diversifying. Nowadays diversifying doesn't help in a downtrends, but fortunately uptrends still offer great opportunities.

If you read between the lines, the current short term trend seems to be up (for a while...).

Dax volume 26.4.2012

Volume index is currently pointing to higher high, so Dax could climb above 6800 no later than next week and then we could see a consolidation.

Dax indicators 11.4.2012

Current rebound could go as high as 6850-6860 without breaking the downtrend in RSI.

But most of the stocks are already below their 50 day averages.

MSI is pointing down and still staying at quite high level.

Overbought and sold conditions have easened from their extremes and almost converged. Before the relation is inversed there is potential that index would stay low or decline more.

But seems like investors want to take a little bit more risk currently, so at least we saw short term market bottom.

The selling volume hasn't been special

Volume index hasn't made any new lows.

TRIN was temporarily positive, so the investors were buying advancing stocks (obviously when almost all the stocks were rising...).

Dax indicators 4.4.2012

Dax closed with 30 declining stocks measured from close and 30 declining measured from open. Averagely there are about 4 similar cases during year. Statistically this hasn't been very good sign for the next day. There is 86% chance (average -1.86%) that we close lower than 6784. 6.3.2012 we closed only 0,57% higher, so if the day will be up, the potential is limited. Yesterday's trading signals suggested to short FRE and FME, because usually high beta stocks lead up if we will see strong rebound.

Dax hourly chart looks bullish with DMIs at the extreme levels, RSI and MACD going to point up.

However, in a longer perspective Volume Index has dropped more aggressively than the prices...

...and here you can see how the prices behave when Volume Index has fresh 20 day low.

Investor risk appetite has been dropping since the middle of March.

Stocks have broken their 50 day moving average quite quickly.

20 day performance still seems surprisingly positive, but it is expected to change. 

Dax cycle is going down. Would it finish the down cycle this time? 

McClellan Summation Index is also in a downtrend.

Dax RSI indicator indicates that the index has had stronger downside momentum than the actual stocks. According to my studies, we could have a tradable market bottom for longer term swing traders within a month.

Dax should have upper target near 6870-6880, but it would be great opportunity to add some short positions. The downside target could be 6750, and pessimistic target 6658.

Dax indicators 2.4.2012

Yesterday was a very bullish day. We saw only 4 stocks declining from their opening.

We got 6 fresh 52 week highs with ADS, BEI, DPW, HEN3, LIN, MAN, MRKK. 

16 stocks are less than -10% from their 52 week highs and averagely gain from 52 week low is 42,1 %.

Looking at 3 month performance we notice that thr are already few stocks trading on the negative side.

Dax cycles is still anticipating more down ahead...

...and so does McClellan Summation Index.

Dax Volume Index doesn't have any meaningful divergence with prices.

Technically Dax can climb to touch the declining trend line at 6129. Even if it does that, there is still negative divergence with MACD and RSI. Breaking above the trend line should also break the divergences.

Dax indicators 29.3.2012

Dax futures are currently trading above 6940, which is nice with yesterday's trades. Indicators are currently very mixed depending on the time frame, so I should be careful not to take too much bearish or bullish outlook and concentrate only short term outlook.

Even some indicators are bearish mid term, it is hard to believe in any bigger correction before we get 52-week lows. Currently we are having zero lows. Another (and likely) possibility is that the stocks are currently so highly correlated, that this kind of behaviour isn't needed.

Dax Volume Index is giving a possibility to drop above 6500.

20 day highs-lows ratio is still on the bullish side.

Dax Cycles is a little bit bearish.

6974 is still an important resistance today, and if Dax manages to climb above it then climb above 7000 should bury bear's hopes (again). Although, today's low could be near 6868, but still above yesterday's low. If today is a strong up day, some of my reliable indicators will also turn from very oversold condition, thus indicating bullish Monday. We will see.