Dax week 33

Dax finished the week above the declining trend line, which we have been watching closely. Stochastics is indicating overbought condition which is not yet a selling sign. The condition could easily last 1-10 weeks.

On a daily basis, technical break-out above the longer term declining trend line was strong and without volume surge. Therefore the break out should not be treated an exhaustion and we will see higher high during next week.

It is expected that all the Dax stocks would climb above their 50 day moving average before intermediate term market top.

McClellan Summation Index is in a strong uptrend.  

Risk behavior has been declining even the index has been rising, so risk appetite should grow next week and lead stocks higher.

Stocks are highly correlated, so the investors haven't been picking the "right" stocks but only following the market trend.

It is obvious that Dax is trying to reach above March high and above 7200.

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 10.4.2012

Even the short term market bottom could be near I still have 3 different algos pointing to have an open short position for Dax.

Dax cycles down.

Dax beta down. 

Dax overbought vs. oversold converging.

Dax 20 day performance down.

Dax RSI down.

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.

Dax indicators 27.3.2012

Dax still has negative divergence with indicators. Even the divegences haven't been working out lately, this should be treated with cautious.

Dax had two 52 week highs, which is a bullish signal. 

20 day cycle seems cautiously positive, even the latest performance hasn't been clear.

Dax Cycle Indicator is based on 2 month price behaviour. Nor does this indicator gives clear direction. 

Dax Volume Index has lately acted in unison with prices.

Today's index setup will be to close the long position with index at 7170 or near close and then take short position for two days.