DAX market analysis

The German DAX is stuck in a range between 5750 (5700) and 6080 (6120). A close above that range would give us an upside target around 6400 and then 6600. A daily close below this range would end the DAX to 5500 and later down to 5000. So all in all we just have to wait for a break of this range...
Overall I am still very bearish on the stock market but until year-end I still think a rally could occur. 6600 would be a nice target, but not further than 7000. But do not get me wrong, if we close below 5700 I think a year-end rally would be quite difficult!

At this point intraday 5890 there is still no convincing upside reversal in place, so I think we have not seen the lows of the day.

DAX back to 6400?

The German DAX touched in October the 200 day exponential moving average and sold off hard afterwards. Since then the DAX stabilized between 5800 and 6200. Even tough it is still in this range I think a break to the upside is imminent. To me it does not look like a completed top! At least the 6400 area should be retested maybe in the upcoming week. I am expecting a weak start into the trading week ahead but until Thursday the DAX could rise to 6400. Above that 6600 seems to me like a reasonable level for the DAX to reach in the next few weeks. If we will get a very strong year-end rally the DAX can even rise to 6990 (former level of support). But that should be at least a medium term ceiling for the DAX. At this point I am expecting a huge sell-off in 2012 and I will post if anything changes in that forecast!
I know this is a bold call but I am risking it!

The SPY (ETF on the S&P 500) also consolidated after the recent highs. If the SPY gets up to the highs from October the DAX would be around 6400 and if the SPY would rise to 132 (the declining trendline) the DAX would rise to 6600! These are very key levels in my opinion. As long as 5750 in the DAX and 123 in the SPY hold as support there is no need for shorting the market in the intermediate timeframe!

DAX 6200...

In the DAX 30 there is a gap-support and trendline support at 6200.. From there I expect a recovery over the next few days. Especially with the ES down 16 points before the US market is open the downside should be limited.. Below 6190 the target would be around 6140!

SPY at resistance?!

The S&P 500 gapped up today and the action was very bullish until 3am. I don't want to beat around the bush: my sense is that we could have seen the/a top today!

First of all despite the general view a gap up is a sign of strength I see this gap as an exhaustion gap. After a huge move a gap usually indicates either that the bulls resign (gap-down) or that the bears resign!
Moreover some points are very similar to the action on July 7th.
1. After a big upward movement a gap.
2. Buyers control the market until the final hour of trading.
3. Profit-taking in the final hour.
4. Shooting star on a daily chart.
5. Compare the sentiment readings of the AAII survey. Last time the sentiment was similar to this week's was on July 7th.

S&P Breakout?

Today the S&P 500 finally closed above 1230. Is this a convincing breakout?

I don't think so..
Why? Just take a look at the German DAX:
October 13th 2010: DAX broke out of its trading range; S&P did not but followed some days later.
August 1st 2011 DAX closed below 7000 for a while and S&P was still in its trading range but broke down on the next day.
And now this trading range:
October 4th 2011: S&P broke to new lows while the DAX was 120 points away from its recent lows.
October 21st 2011: S&P broke to new highs while the DAX is 130 points away from a breakout (future 120 points)