Dax week 37

Will we see all time high soon? The chart is beginning to give an indication of higher high level if the rest of the week continues to advance. Currently we are trying to break above 7400, which would lead to 8000.

McClellan Summation Index indicates that the trend is up.

50 day cycle indicates that the trend is up.

I would like to see 100% of Dax stocks abobe their 50 day moving average before intermediate term topping process.

Only concern is that the current shorter term risk cycle isn't behaving normally, although the current situation isn't normal either. Anyway, market has been pricing QE3 for a while and when we got it, Dax could pullback soon -2-5 %.

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 stocks and 50 day SMA

None of the Dax stocks are currently above their 50 day moving averages. This is a good sign, meaning that we could reach some kind of a market bottom soon.

Current positions: SHORT: DAX, FME, FRE; LONG: TKA.

Dax sentiment 24.5.2012

According to indicators, we have a little evidence of reliable market bottom yet. So far the trading range of 6200-6400 has proven to be reliable. Dax hasn't yet touched it's 200 days moving average which is holding the key level near 6200. It is highly expected that we could at least visit 6150-6180 before forming any reliable (tradable) market bottom.

Few indicators

23% of Dax stocks are still above their 50 day moving average.

Last week we wrote that the stock correlation is in uptrend. Watch out carefully, because diversification doesn't help if it gets too high.

No signs of a bottoming process yet. We need sellers to calm down and more buyers.

If you liked our indicators, you should check this page more often.

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 and global indexes

A short peak to global indexes and technicals


From the table below you can find which of the markets and asset classes are above or below their simple 200 days moving averages, which 20 days moving averages are below 200 days averages and which markets have positive MACD(12,26,9).

Dow Jones Industrial Average and France's CAC40 are the first weak indexes. Japan's Nikkei 225, Russia's RTS, Taiwan's TSEC and Shanghai Stock Exchange Composite turned below their 200 days moving averages.

	MACD		SMA 200		20 vs. 200
	d_1	d_2	d_1	d_2	d_1	d_2
Goldsilves (XAU)	-1	1	-1	-1	-1	-1
Oil (OIX)	1	1	1	1	1	1
natgas (UNG)	1	1	-1	-1	-1	-1
agric (DBA)	-1	-1	-1	-1	-1	-1
S&P500	1	1	1	1	1	1
Dow Jones	-1	1	1	1	1	1
Nasdaq	1	1	1	1	1	1
Russell2000	1	1	1	1	1	1
Japan	1	1	-1	-1	-1	-1
Germany	1	1	1	1	1	1
Finland	1	1	1	1	-1	-1
UK	1	1	1	1	1	1
France	-1	1	1	1	-1	-1
Russia	1	1	-1	1	-1	-1
Brazil	1	1	1	1	1	1
India	1	1	1	1	-1	-1
Hang Seng	1	1	1	1	-1	-1
SSEC	1	1	-1	-1	-1	-1
Korea	1	1	1	1	-1	-1
Taiwan	1	1	-1	1	-1	-1
Turkey	1	1	1	1	-1	-1
Malesia	1	1	1	1	1	1
Emerging Mkts (EEM)	1	1	1	1	1	1

Below, I have calculated the subtraction of positive and negative MACDs from the above table, which gives 16 positive and 2 negative. You can see how this global bullishness usually affects to Dax index. So, the current bullishness has been historical when comparing different indexes and seeing their MACDs positive lately.

MACD short term view

In a longer term of view, you can see that the volatility of this index has been growing. In the other words,  the indexes and asset classes seem to have stronger correlation.

MACD long term view

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.