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 trend and rebound 23.7.2012

Seems like the risk appetite is about to decrease as expected. Chasing high beta doesn't usually last long.

Anyway, longer term trend still seems to point up.

Stock correlation is at unpleasant high level, so diversification won't help now because most of the stocks are moving into same direction.

We already have had a quite strong pullback. It would be great opportunity for a rebound tomorrow.

Dax trend 12.6.2012

Looks like Dax has probabilities for opening above 6200 tomorrow. Some of the indicators are already showing some strength, thus suggesting short term / intermediate term trend change.

Dax has been trading more and more riskier stocks. The indicator is currently just above 50 and usually this level has indicated higher levels for the index as well.

50 day cycle is obviously turning to uptrend in despite of bad news.

 Stock correlation is heading to lower levels and giving better opportunities for stock picking strategy.

Dax 1.6.2012

Classic!

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.