Dax indicators 2.5.2012

According to to my earlier posts, we are currently consolidating. The range remains unknown even 6750 seems to act as an important support/resistance.

20 day highs vs. lows seems a little bit sloppy at the moment. Could it turn down?

Also Dax cycles seems to be going down.

Dax strength indicator is currently in a consolidation area. I have marked the previous areas by red windows. So, don't expect higher close than 6800 during next be 1-3 weeks. Intraday highs don't matter.

Risk indicator came down as it was supposed to come.

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 indicators and trades 20.4.2012

Quite variation between 3 month returns from -10% to almost +30%.

20 day highs vs. lows ratio is still pointing down, but there is not much to go anymore. 

Intermediate cycle is showing normal cyclical behavior and could bottom soon. 

McClellan Summation Index has still room for the downside. 

...Although some indicators like modified RSI has been improving and showing signs for a short term market bottom. 

Risk aversion has also improved. 

Current positions include: LONG: DAX, CBK, DBK, HEI, DAI, BBZ, EVT, SNG (open new long positions on Monday for DPW, VOW3), SHORT: BEI, FME.

Dax indicators and performance 19.3.2012

On a daily basis, the banking sector over-performed clearly

 

18 stocks are less than -10% from their 52 week highs.

Volume index still has small negative divergence with prices, even the latest performance has been very strong.

The short term trend has been up and 20 day highs vs. lows confirms this. Still there is an indication that the investors are becoming more risk averse. 

Dax cycles has been pointing up, even the latest cycle down wasn't completed.

Dax indicators 7.3.2012

Dax failed twice to get through 76,8% Fibonacci level. Yesterday's rebound was highly expected, but if this was double top reversal, then it would give 6487 as our next downside target.

Dax Volume Index made lower close two days ago. Additionally, this was 20 day low which indicates...

...over 90% probability that we would see another lower close in Dax during next 3 days.

McClellan SMI is indicating a downtrend.

20 day highs vs. lows is indicating a downtrend.

Dax indicators 2.3.2012

Ascending triangle (bullish) or Rising wedge (reversal/bearish) in the forming?

Break out from ascending triangle would set the upside target to 7300. However, ascending triangle would need a volume contraction, which hasn't happened at the time. Other possibility could be rising wedge, where Dax could still rise above 7100 and then fall. Anyway, we will be a little bit wiser on Monday when Dax should have two options: either gap up near 6970 and then break above 6990, or gap down and close below rising trend line and below 6900, and thus increasing the odds for a reversal.

Dax cycle has been pointing down for a while.

McClellan Summation Index has been pointing down for a while.

More companies have performed negatively during last 20 days.

Dax volume index has negative divergence with prices.

Riskier companies (TecDax, Small Cap Dax) with high beta underperformed during last week.

Dax technicals 1.3.2010

Dax has a important resistance at 6990. Now when S&P500 is facing resistance, Dax hasn't been able to make higher high since 21.2.2012. MACD and RSI diverge negatively from index.

More and more stocks are making lower lows and 20 day lows.

38% of the stocks are currently performing better than the index. However, decline of this ratio is actually bullish for the index, even it also indicates upcoming short term top.

Dax cycles indicator has been making lower lows for a while.

McClellan Summation Index has been making lower lows for a while.

15 companies are less than -10% from their 52 week highs while just 1 company is less than 10% from it's 52 week low.

Dax volume index has still negative divergence with prices. Should this be corrected soon or will it continue to diverge more?

Prices seem to stay high without any good reason or bad news to sell. In despite of that Greece 1 year bond yield is at the absurd level 951% and the country has been downgraded to selective default. Officials still argue no to default?

Dax technicals 10.2.2012

Overbought condition easening

Dax dropped from the ceiling of 20 day price channel. Usually this has meant at least testing of a 20 day moving average which lies below 6600 near rising trend line. If Dax breaks down below the rising trend line and 20 day moving average, it would add the probabilities to test the bottom of price channel near 6200.

Now we have 3 stocks with 20 day performance negative.

The amount of overperforming stocks have been increasing. Usually this hasn't been a good sign (in despite of the latest performance which has been exceptional).

Clearly we can see that investors have interest to reduce the beta (one month beta) of their portfolios. The latest developement has been risk averse and could signal further drop in the prices.

TRIN was negative, thus revealing that declining stocks got bigger part of the trading volume. 

Volume Accumulation/Distribution dropped below -500, which revealed heavier than average selling.

Dax volume index seems to be reacting stronger on the downside than the price index.

Backtesting results from the history data reveals, that if TRIN is negative, Volume A/D below -500 and Volume Index decreasing, there is 37% probability for a positive next day. Adding that the condition has been extremely overbought, this drop in prices would easen the situation and make it healthier. Anyway, we need to watch the situation carefully, if the Dax decides to drop below 6600 and signal a drop below 6200. 

Dax indicators 9.2.2012

The market has become more risk averse

Again, all the stocks have positive performance during the last 20 days. Commerzbank has been leading the way up.

...And as you can see, very seldom all the stocks have positive 20 day performance. So, investors hasn't been caring too much what they are buying, or they have been buying higher beta .

Dax cycles indicator reached all time high. Cannot fight with the market. Overbought condition can be very prolonged period until it ends.

McClellan summation index has also been leading the way up. If we would want to see this indicator turning bearish, we would need the day to close with 11 stocks positive and 19 negative.

There is a small negative divergence with volume index and price index (Dax).

Here is one indicator to measure how the market positions itself towards risk. I have calculated which 10 stocks get the most of the volume. This would get approximately 70-75% of  the volume behind all the Dax stocks. Then market beta has been calculated from the basket of these 10 stocks. When this indicator is above 1 and rising, the market is willing to take more risk and vice versa. Currently the beta is decreasing, so the market is not willing to take any more risk and thus expected to become more risk averse. At this condition the market will also react stronger on negative news.

Also, the index made new 52 week high, but none of the stocks actually hasn't been able to reach new highs (currently still 1,5 hours to close).