The market will gap down tomorrow, so the odds are on the bear's side. Remember to check out the gap statistics.
Friday, February 10, 2012
Thursday, February 9, 2012
Dax indicators 9.2.2012
The market has become more risk averse
Again, all the stocks have positive performance during the last 20 days. Commerzbank has been leading the way up.
...And as you can see, very seldom all the stocks have positive 20 day performance. So, investors hasn't been caring too much what they are buying, or they have been buying higher beta .
Dax cycles indicator reached all time high. Cannot fight with the market. Overbought condition can be very prolonged period until it ends.
McClellan summation index has also been leading the way up. If we would want to see this indicator turning bearish, we would need the day to close with 11 stocks positive and 19 negative.
There is a small negative divergence with volume index and price index (Dax).
Here is one indicator to measure how the market positions itself towards risk. I have calculated which 10 stocks get the most of the volume. This would get approximately 70-75% of the volume behind all the Dax stocks. Then market beta has been calculated from the basket of these 10 stocks. When this indicator is above 1 and rising, the market is willing to take more risk and vice versa. Currently the beta is decreasing, so the market is not willing to take any more risk and thus expected to become more risk averse. At this condition the market will also react stronger on negative news.
Also, the index made new 52 week high, but none of the stocks actually hasn't been able to reach new highs (currently still 1,5 hours to close).
US money flow 8.2.2012
Even the investors seem to be very positive, longer term money flow turned negative. It could be early sign of a short term market top if the seemingly ongoing trend in money flow strengthens. Usually when the money flow indicator has turned negative, has proven to be a good shorting opportunity for aggressive swing traders.
Wednesday, February 8, 2012
Monday, February 6, 2012
Dax performance and sentiment week 6
From one extreme to another
Dax investors have been very optimistic in a broader sense, because all the stocks have positive performance during last 20 days.
Rarely, all the stocks have positive 20 day performance.
Negative divergence with price and volume index no longer exists.
Dax cycles is almost at the all time high reading.
90% of the stocks are 1 standard deviation above their 20 day moving average. This is the highest reading we have seen in the history. 86,7% of the stocks are 1 standard deviation above their 50 day moving average. 90% is the highest reading we have seen. Previously as high reading happened in the end of October.
McClellan Summation Index is almost at the level 36,66 which is the second highest level in it's history. However, 50,27 is the highest reading we have seen so far.
Normally extreme conditions have tendency to go even more extreme before pulling back. Yet, it is difficult to tell, how long this current extreme condition will continue, but it might not end well.
Sunday, February 5, 2012
Sentiment comparison Germany vs. US
Sector comparison between Dax indexes and US indexes reveals that the continents differ in a manner of chasing beta.
During last 5 days the Small Caps and Technologies clearly outperformed in the US.
In Germany the best performing sectors were actually Middle Caps and Blue Chips.
Still it is obvious that the US is more bullish than Europe.
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