Dax higher high ahead

Volume index of Dax already reached higher high, which would indicate Dax to close at least above 7500 in a very near future.

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 16.4.2012

The support at 6544 managed to hold, so now we can try the opposite direction and above 6800. RSI is already making higher lows, which is a positive signal.

20 day high-low ratio is already at low level comparing to normal cyclical behavior.

Dax modified RSI is also showing sings of a bottoming process.

Also the risk appetite is growing. 

Overbought and sold already converged, so the best shorting opportunities have gone so far.

Dax volume indicator is in unison with Dax. 

Bear territory seems to end soon.

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 volume index 14.3.2012

Volume index has almost faded out the negative divergence with price index. Looks like it tries to confirm 7400 for Dax.

We have entered the maximum area. Here we can expect higher highs, but when we get out of this area, the fun ends.

Currently the probability for Dax to close higher than 7079,4 is 74%. Average rise for the next 3 days would be 1,18%, so at the moment it seems likely that Dax would climb higher than 7162, thus returning into a longer weekly based uptrend.

Dax statistics 20.2.2012

Not much to say, but wait

Long term view is bullish as long as stocks are making new highs. We haven't seen new lows for a while. 

Long term bullish view can be changed into bearish if we  see new lows in a future, but there are only few stocks near their 52-week lows. Averagely Dax stocks have risen 46.41% from their lowest levels. Averagely stocks are -15.16% from their highest points. There are 15 stocks less than -7% from their highs.

Blue chips have been leading the latest advance in stocks. Technology and small caps have been lagging.

So far investors have pushed all the Dax stocks above their 50 day moving averages. This kind of condition hasn't been very common in the history.

Oversold condition is literally at zero, even the overbought condition has loosened a bit.

McClellan Summation Index again started to point higher levels after temporary decline.

Dax Volume Index has been lagging during the whole rally, which indicates investors haven't totally been interested to participate.

Global stock market looks clearly that US has been leading the rally up. Nasdaq and S&P500 are already on the positive track annually while others are lagging. We can at least conclude that FED programs are doing well.

I have been calling a top many times lately, and now I cannot do anything but wait. There are few options how the overbought condition usually fades away: condsolidation, small pullback, correction.

Dax sentiment 30.1.2012

We have seen four 52 week highs during last 5 days when Beiersdorf, Fresenius, Merck and SAP have been rising to higher levels. Beiersdorf and Merck are already trading over 30-times their earnings while Fresenius is at 19 and SAP below 16 (according to Yahoo Finance). So, all these four are highly above the average Dax P/E.

Anyway, the volume dropped to 30% from the recently seen volume. The investors just seem to be waiting a good reason to buy or sell even the upside seems to be limited.

20 day highs versus lows is already quite high.

I am watching few indicators carefully to see early topping sings or weaknesses. McClellan Summation Index is based on advance/decline -ratio, and it has proven to be quite reliable indicator. For today, we would need to see 8 more declining than advancing stocks inside Dax if we want this indicator to to decline (ie. 19 declining and 11 advancing).

Dax volume index is dragging a little bit compared to the price index.

Dax sentiment 26.1.2012

Risk/reward

Commerzbank has obviously been the strongest performer during last 20 days.

However, only a little bit over 40% of the stocks have performed better than the index during last 20 days.

Rarely all the stocks are performing positively during 20 day period. Now we have 27 positive performers.

20 day highs divided by lows has been positive too long.

Dax cycle seems to be a little bit high, maybe we are topping soon.

Sales have become stronger lately even the buying has remained high.

Trading volume has been increasing lately.

McClellan Summation Index has been leading the way up. We haven't reached the extreme level yet and anything is possible before the indicator will begin to decline. 

Although, TRIN has been negative already 3 days in a row, which means that the investors have been selling more than buying at these levels.

The moving average of Trin also turned negative. Even it is possible that the market could rise a little bit, the probability of short term market top has been rising. Previous similar cases with Trin has been marked in the below graph.

Overview: at the current situation, the risk for the downside correction is higher than the upside reward. Sentiment has been cautiously bullish for some time, but the economic risks haven't been resolved. The market will become exhausted. So, for now on, during the next 1-2 months we should see correction to 6000, or if the market cannot find any good reason to sell, at least consolidation. It would be wise to step out of long positions or aggressive traders could begin to build their short positions.

Dax sentiment week 4

Volume returns

Dax has incredibly climbed above it's 200 day moving average. There hasn't been much difficulties to break through resistance levels. Now Dax should have a challenge to climb further above October highs.

Stock performance has been revealing normal short term bullishness for couple of weeks.

Cycles indicator is already quite high, almost 60%. Previousy this high level has indicated topping process.

Trading volume seems to be doubled in two days comparing to previous months, even this kind of volume peaks should have some meaning behind them. It is obvious that some big investors have been underperforming indexes lately and should soon allocate more to stock market. How many believe that this peak in volume means exhaustion or a start of a new bullish trend?

The latest concern was volume index with negative divergence. Ok, this divergence has been corrected in two days.

Even the volume has been strong during last two days, there is one thing to consern: advancing and declining stocks. In despite of strong volume, there actually have been more declining stocks than advancing stocks...

Accumulation/distribution peaked very aggressively.

...only 3 cases when Accumulation/distribution has been this high...

I have been little bit bearish lately because the recent stock market rally hasn't seemed very healthy, because volume has been low and many indicators have been indicating negative divergence compared to prices. It is obious that the rally has partly been a short squeezing. Now the short positions should have been taken out and we will see what will happen next. After all, one should remember that stocks go up by stairs and down by elevator. I personally wouldn't go long at this point. The market is expected to decline a little bit first to attract investors to invest more.