Dax week 39 technical analysis

Weekly picture looks like we have got two exit signals for short positions. Everyone is bearish, but I have been bullish for a while and trying to find more signals to make good counter-trend trade.

Gap statistics for Dax (current day open to close)

My latest gap statistics was calculated how the next day after big opening gap has been performing. However, it seems that today there will be big opening gap, so here's some statistics how the current day might perform from open to close.

Today's gap will be somewhere between 2,5% - 3%. With volume increase, this will be more likely a run away gap.

Without volume increase
gap up	positive day	average %	stdev	max	min
3,00 %	100,00 %	1,08 %	1,46 %	3,67 %	0,24 %
2,50 %	83,33 %	0,74 %	1,11 %	3,67 %	-0,68 %
2,00 %	66,67 %	0,49 %	2,86 %	9,06 %	-7,07 %
1,50 %	63,46 %	0,29 %	2,28 %	9,06 %	-7,07 %
1,00 %	64,63 %	0,13 %	1,71 %	9,06 %	-7,07 %
0,50 %	62,01 %	0,14 %	1,41 %	9,28 %	-7,07 %
0,00 %	58,23 %	0,15 %	1,32 %	9,28 %	-7,07 %
With volume increase above 10 day average
gap up	positive day	average %	stdev	max	min
3,00 %	100,00 %	1,96 %	2,42 %	3,67 %	0,25 %
2,50 %	100,00 %	1,25 %	1,42 %	3,67 %	0,25 %
2,00 %	87,50 %	1,35 %	4,47 %	9,06 %	-7,07 %
1,50 %	75,00 %	1,12 %	3,72 %	9,06 %	-7,07 %
1,00 %	60,00 %	0,18 %	3,26 %	9,06 %	-7,07 %
0,50 %	60,00 %	0,39 %	2,60 %	9,28 %	-7,07 %
0,00 %	52,49 %	0,04 %	1,89 %	9,28 %	-7,07 %

Dax sentiment week 39

Positive signs

We have seen some positive signs lately on last days. Opening gap on thursday, statistically positive day on Friday, and continuation of these bullish patterns on Monday. On Monday, we already saw the first crossover of 50 day moving average when Fresenius Medical Care reached it's 20-day high. After 29.7. all Dax stocks have traded below 50-day moving average.

Although, Beiersdorf and Fresenius SE dropped to new 20-day lows, the technical signs have been more positive than negative. 30 percent of Dax stocks are already above their 20-day highs, which seems bullish for short term.

Indicator for measuring oversold - and bought is still in quite extreme condition, since buying is yet lagging. The expectation is, that the condition will recover to the balance. When green buying will began to show more positive development, the price index (Dax) could quite quickly recover to higher levels. Anyway, we still need a few positive news to have the impact.

Seasonality is bullish biased for the end of the year. Last four weeks have been negative biased since 1990, and the probability for positive week has been about 40%. The seasonality for the rest of the year gives hope for bullish investors.

The average returns have been more positive for the rest of the year.

The volume index, based on invidual stock volumes, seems to be syncronised with price index. As you can see from the aboce graph, volume index began to show negative divergence already in last May making lower highs and lower lows. At the same time the price index (Dax) was trading in a range. Recently the volume index hasn't dropped below the level of June 2009.

Technical indicators are showing positive divergence for short term, especially RSI. Daily chart gave positive signals last thursday (exhaustion gap), friday (hammer candlestick), and monday (bullish continuation). However, long term picture is negative because of negative and downtrending TRIX and MACD.

Dax daily technical analysis 23.9.2011

Gap down thursday didn't disappoint the statistics. Just study the statistics from my previous posts. Could be a short term trend reversal, but we need to see more bullish signals on monday.

Dax sentiment 23.9.2011

Buying still lagging

It is obvious that investors are not buying stocks at the situation. The sellers became again aggressive yesterday thus making the index close almost -5% lower. During this week, we have seen 3 new 52-week lows: Deutsche Post, Lufthansa and Thyssenkrupp. The chart below tells the story about bulls and bears: if the buying indicator (green) won't start to climb soon, the bears are in control.

 

Index has been dragged down by fewer and fewer stocks that has been very heavily sold, especially banks. However, 60% of stocks have been performing better than the actual index. This seems very promising if we want to find short term bottoms, even this ratio can go much higher as can be seen during the 2009 lows.

 

According to survey made by Cognitrend the sentiment of Dax investors have been positive. 

Gap statistics for Dax

The opening gaps can be differentiated how the volume behaves and if the gap is happening in an uptrend or a downtrend. However, below you can find statistics for the next day after gap up or down. The gaps are categorized with volume. Be free to study. If you don't understand something, be free to send me a message.

Without volume increase
gap up	positive day	average %	stdev	max	min
3,00 %	80,00 %	0,24 %	1,07 %	1,34 %	-1,52 %
2,50 %	66,67 %	0,21 %	1,78 %	3,45 %	-3,19 %
2,00 %	62,50 %	0,61 %	2,06 %	6,07 %	-3,19 %
1,50 %	51,92 %	0,04 %	2,20 %	6,07 %	-5,25 %
1,00 %	50,00 %	0,02 %	1,92 %	6,07 %	-6,49 %
0,50 %	50,45 %	0,01 %	1,56 %	6,07 %	-7,01 %
0,00 %	51,87 %	0,02 %	1,48 %	10,34 %	-7,16 %
gap down	positive day	average %	stdev	max	min
0,00 %	54,75 %	0,04 %	1,64 %	11,40 %	-6,84 %
-0,50 %	56,43 %	0,13 %	1,88 %	11,40 %	-6,29 %
-1,00 %	61,83 %	0,35 %	2,46 %	11,40 %	-6,25 %
-1,50 %	65,22 %	0,75 %	3,31 %	11,40 %	-6,25 %
-2,00 %	69,57 %	1,58 %	3,85 %	11,40 %	-4,88 %
-2,50 %	69,23 %	1,92 %	4,82 %	11,40 %	-4,88 %
-3,00 %	77,78 %	3,34 %	4,95 %	11,40 %	-2,04 %
With volume increasing above it's 10 day average
gap up	positive day	average %	stdev	max	min
3,00 %	100,00 %	0,79 %	0,77 %	1,34 %	0,25 %
2,50 %	100,00 %	1,24 %	1,35 %	3,45 %	0,05 %
2,00 %	87,50 %	1,45 %	1,54 %	3,45 %	-0,58 %
1,50 %	83,33 %	1,24 %	1,91 %	3,45 %	-2,83 %
1,00 %	56,00 %	-0,07 %	2,61 %	3,45 %	-6,49 %
0,50 %	56,00 %	-0,09 %	2,09 %	4,08 %	-7,01 %
0,00 %	50,68 %	-0,06 %	1,82 %	10,34 %	-7,07 %
gap down	positive day	average %	stdev	max	min
0,00 %	50,60 %	0,03 %	2,14 %	11,40 %	-5,13 %
-0,50 %	44,44 %	0,20 %	2,98 %	11,40 %	-5,02 %
-1,00 %	48,00 %	0,79 %	3,99 %	11,40 %	-5,02 %
-1,50 %	66,67 %	2,48 %	4,73 %	11,40 %	-2,53 %
-2,00 %	85,71 %	4,02 %	5,26 %	11,40 %	-2,01 %
-2,50 %	83,33 %	4,38 %	5,66 %	11,40 %	-2,01 %
-3,00 %	100,00 %	5,66 %	5,28 %	11,40 %	0,91 %

Gap down statistics for Dax

In a light of history, there seems to be a edge after huge gap down days. Gaps could always be taken seriously and studied carefully, because they could have a meaning behind them. One good source to study gaps is Stock Charts, where you can find good definitions. Yesterday's gap could be exhaustion gap, which could be defined by increase in volume.

From the table above, you can clearly see what has happened after we have seen gaps down. The profit is calculated from a close of the gap day to the close of a next day. The statistics is from 1995-2011.

gap down	positive day	average %	stdev	max	min
-3,00 %	77,78 %	3,34 %	4,95 %	11,40 %	-2,04 %
-2,50 %	69,23 %	1,92 %	4,82 %	11,40 %	-4,88 %
-2,00 %	69,57 %	1,58 %	3,85 %	11,40 %	-4,88 %
-1,50 %	65,22 %	0,75 %	3,31 %	11,40 %	-6,25 %
-1,00 %	61,83 %	0,35 %	2,46 %	11,40 %	-6,25 %
-0,50 %	56,43 %	0,13 %	1,88 %	11,40 %	-6,29 %
0,00 %	54,75 %	0,04 %	1,64 %	11,40 %	-6,84 %

Dax daily technical 22.9.2011

Could be more range trading in a future

At the moment, we are counting on a rebound to 23,6% Fibonacci level which is 5532. Rising lower trend is a key level today, so watch out 5170. Anyway, after possible rebound there could be more selling ahead. Although, yesterday's gap down was very huge (-3,32%) there is very high probability that the next day (today) is positive.

Dax technical picture week 37

This is an update to my previous weekly picture from couple of weeks ago: http://theunderlyingdax.blogspot.com/2011/08/dax-long-term-update.html

It seems that the rebound has been highly anticipated. Anyway the index dropped to even lower levels than previously expected. The sentiment is getting a little bit positive because investors seem to get frustrated about bad news. It is still expected that the index would reach 6000 level. Longer term picture has still negative outlook, thus be careful during this rebound.

 

Dax 16.9.2011

Seems like a rebound, finally

It doesn't matter if you are bear or bull, but prolonged situations get people bored. Now it seems that some people are tired of this pessimism.

My favorite indicator for buying and selling equilibrium reveals clearly that the bear camp is decreasing. Bulls need some more power to take index levels higher. We will watching the green line from below chart very closely. Usually these lines have quite much inertia, so it is very likely that we see them connecting each other, which means positive time for index.

 

The cycles indicator tells the same story.

Trin value is increasing, which is positive sign.

52-week new lows reached almost the same levels than during Lehmann collapse. Even the whole situation reminds the same. So, rebound, and it is still possible to see even new lows being tested.

Fewer and fewer stocks were dragging the index lower. Now it would be time for a broader based short term bull market.

I have been calling the rebound for some time now. This rebound could not have to do anything with real economy, but who cares. I hope that the investors could get more positive.

Dax update 31.8.2011

A strong day

Dax surged with low volume, which is not surprising. Stocks can go up with low volume, but going down needs bigger volume as you can see. Normally when the volume peaks and index falls, it has been good opportunity to buy.

Extreme sold and bought conditions are still indicating trend change. However, we need to see demand curve to gain, although supply has already turned. It is obvious that investors are still cautious to buy after such a decline in stocks and recent weak economic reports. We need to watch the demand very careful if starts to accelerate, because we still are on the edge.

 The cycle indicator, which is constructed from the previous supply and demand curves, is indicating a turning point for Dax.

We haven't seen any 20-day or 52-week new lows during last 3 days. One interesting measure to watch is the number of individual stocks performing better the actual index. In capitulation and market bottoms, the level seems to peak. Vice versa, when the market tops fewer and fewer stocks are actually performing better than the index. 31.8. we had a situation where 8 stocks performed better than the index. In the above picture, I use 10 day moving average to smoothen this indicator and better showing the trend.

In bear market, it is normal to see 52-week lows and no new highs. Actually, we haven't seen any 52-week highs recently.

Trin peaked to negative level quite strongly, which indicates investors were selling on strength. It still might be the strategy to sell on rebound. Although, strong negative TRIN might be the consequence of low volume.

It seems that investors are in wait-and-see mode. The selling has settled, but still not many buyers. Earnings report season is starting soon and we can see strong rebound. Anyway, these seems a good opportunity to be a contrarian and establish long positions to Dax. I would still remind to put stop loss to the recent market bottom level.