Wednesday, November 23, 2011
DAX 5500 - Market Analysis
The DAX reached 5500 points in the premarket. I think there is a good chance for a rebound towards 5750. At least the gap should get filled today. I still do not think that this is THE bottom. After a retest of 5750 I think we are heading lower. For sure we could fall to 5000 without any rebound and without closing the gap but in my opinion this is a very low probability scenario.
Monday, November 21, 2011
DAX Analysis
Today's action was very negative. The German DAX 30 closed at the lows of the day at 5606 on higher volume.
As long as the DAX 30 stays below 5800 there is a first downside target around 5000 to 5100.
What this action means in a bigger timeframe will be discussed in one of the following posts.
Nevertheless keep in mind that a close above 5800 would be a first indication that today's sell signal was a false break to the downside.
As long as the DAX 30 stays below 5800 there is a first downside target around 5000 to 5100.
What this action means in a bigger timeframe will be discussed in one of the following posts.
Nevertheless keep in mind that a close above 5800 would be a first indication that today's sell signal was a false break to the downside.
Thursday, November 17, 2011
SMI (Swiss Market Index CH0009980894) and Nestlé (CH0038863350)
The SMI compared to other indices had a very weak recovery from the 2009 lows and since early 2010 the SMI could not make new highs. It also crashed much harder in August 2011 and nearly reached the 2009 lows. On the monthly chart you can see two big reversal candlesticks but nevertheless the recovery is still very weak compared to the foregoing selloff. A very important level of support/resistance on the monthly chart is the area between 5900 and 6000. Back in 2004 this area acted as resistance and in 2010 and 2011 as support! I want to see a monthly close above 6000 to get bullish.
On the weekly chart you can see slow recovery since August 2011. The SMI just managed to close the gap around 5750. You can also see on the weekly chart the importance of 6000 level in the SMI.
On the daily chart of the SMI I kept an eye on the bearish wedge which has been broken to the downside recently. During the next few weeks chances are high for a further decline. At least a retest of the starting point of the wedge should happen. So my target to the downside is 4700 as long as we stay below 6000 on a weekly basis.
The chart of Nestlé (CH0038863350) is more neutral. After a huge selloff in August Nestlé could recover back into the range from the last two years between 50 and 55. In the middle of this range Nestlé often found support or resistance around 52. That is right there where it closed today. So above 52.40 is room to 54.50 to 55 and otherwise a retest of 50 Francs is very possible.
On the weekly chart you can see slow recovery since August 2011. The SMI just managed to close the gap around 5750. You can also see on the weekly chart the importance of 6000 level in the SMI.
On the daily chart of the SMI I kept an eye on the bearish wedge which has been broken to the downside recently. During the next few weeks chances are high for a further decline. At least a retest of the starting point of the wedge should happen. So my target to the downside is 4700 as long as we stay below 6000 on a weekly basis.
The chart of Nestlé (CH0038863350) is more neutral. After a huge selloff in August Nestlé could recover back into the range from the last two years between 50 and 55. In the middle of this range Nestlé often found support or resistance around 52. That is right there where it closed today. So above 52.40 is room to 54.50 to 55 and otherwise a retest of 50 Francs is very possible.
DAX analysis
The DAX hold once again the very critical support area between 5750 and 5800. Nevertheless higher volume and bad intraday action in the last few hours could be a bad omen. Furthermore the S&P 500 broke below its support at 1226 (50 day moving average) and below the trendline I have shown in the last post.
The RSI of the DAX chart broke its uptrend on October 31st and a few trading days later the DAX itself broke its uptrend. Now the DAX successfully retested the broken trendline and should head lower. Moreover a shoulder-head-shoulder pattern could be formed on the daily chart if the DAX breaks below 5750.
A gap down tomorrow below 5750 and all bets are off. Then I would not expect any action like we saw on November 10th. If we close tomorrow below 5750 we would also have a bearish engulfing pattern on the weekly DAX chart.
The alternative scenario would be a daily close above 6125. Then we could see some kind of year-end-rally.
The RSI of the DAX chart broke its uptrend on October 31st and a few trading days later the DAX itself broke its uptrend. Now the DAX successfully retested the broken trendline and should head lower. Moreover a shoulder-head-shoulder pattern could be formed on the daily chart if the DAX breaks below 5750.
A gap down tomorrow below 5750 and all bets are off. Then I would not expect any action like we saw on November 10th. If we close tomorrow below 5750 we would also have a bearish engulfing pattern on the weekly DAX chart.
The alternative scenario would be a daily close above 6125. Then we could see some kind of year-end-rally.
Still nothing has changed in the DAX 30 and S&P 500
The DAX is still in its range between 6120 and 5750. A break in either way would lead to a bigger move to the up- or downside. Below 5750 my first target is 5490 and then somewhere around the 5000 level. Above 6120 my target is 6400 and then 6600!
I think today or tomorrow a break will occur!
The S&P 500 just closed on a supporting trendline. Around 1226 is the 50 day moving average which could act as support too. At this point I have a bearish bias but I am looking forward to a breakout and that should be traded.
I think today or tomorrow a break will occur!
The S&P 500 just closed on a supporting trendline. Around 1226 is the 50 day moving average which could act as support too. At this point I have a bearish bias but I am looking forward to a breakout and that should be traded.
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