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.

Black Friday or Monday?

Markets are on a edge of falling further.

EUR-USD shouldn't fall below 1.26, HSI shouldn't fall below 18000. S&P500 already below 1300, DJI shouldn't fall below 12200. According to money flow of block trades, there hasn't been any major outflows made by big institutions, yet. So far they have managed to keep their nerves. Otherwise we will see more selling and bigger capitulation.

View 8.5.2012

Waiting the indicators to start showing any sings of a bottoming process. Before the process, we can only enjoy the roller coaster ride.

Dax is heading to 6200.

Hang Seng is going to look ugly below 20.000.

EUR-USD is going to 1.25.

And wait AUD-JPY to touch 79.

Market overview 8.5.2012

Market rebounded yesterday as planned. Money flow is still positive, so there are chances for higher high. All the indicators are currently down and possible bottom could be near.

In a technical perspective Dax is in a longer term uptrend and tested the rising trend line. It rose back above it's Fibonacci 6544, which has many times proven to be very important technical level.

It also seems that Hang Seng Index has very important key level at 20551, which is currently holding.

EUR-USD broke down 1.31 which it has been trying already quite a long time. Currently the fall of Euro is seemingly related to politics and especially the last weekend vote results from France and Greece. Falling to a lower levels near 1.25 is still possible even it started to look ugly for other assets as well.

AUD-JPY didn't yet break down below 81, thus indicating that riskier assets are still in favor and the latest drop was only temporarily.

Thoughts about market short term conditions 3.5.2012

In despite of the trading models and algorithms, I see market in an interesting condition. My personal attitude is currently a slightly bearish, so it is easier to see the negative signs.

EUR-USD has been trying to get below 1.31 for a while. Breaking below 1.3 could take it to near 1.27 which should also take the stocks down. Also (high-risk vs. low-risk) AUD-JPY has been in a downtrend since the middle of March and we just saw new lower low. Will we see it falling below 81? At least the fall of both these currency pairs would definitely bring the stocks down in a short term.

And look at Dax while it is again about to try how the bigger rising trend line holds. If Dax breaks below the trend line, then 6544 is a definite. Although Dax has been trying to break below 6544 already since April 10th, this time the probability for a break down will be higher. Maybe we will see 6244? S&P 500 breaking below 1380 would take it back to 1357.

Without any serious bad news, the previous outcome should be enough to interest big players to push the buy buttons. At least the world seems to have a faith in US market and remember, stocks doesn't equal the economy.