DAX update

DAX Aug 2010 1

Here is the longer term bearish case for the , from about 8100 it dropped to 3600, just a little more than some other markets and it did so (arguable) in 5 waves. We know that 5 waves never stand alone hence the expectation that the next upward correction would be just that , a correction. Like most other markets the also managed its way back to about the 62% retracement, almost precisely what the S&P, TSE, FTSE and a half dozen other indexes did.

dax AUG 2

Lately, for almost a whole year, this index has not gained very much falling back to levels that had been reached already by October last year. Obviously the momentum is pretty well dead, furthermore the overlaps that are occurring every 3/4 months make it next to impossible to count this action as impulsive! A triangle seems to be forming which would suggest that we get one more spurt up (about 600 points) in a thrust. This does not make sense in the bigger context so a series of 1-2, (1)-(2) etc. could be what is happening. We should not trade above 6400 or so to keep this possibility alive. (these charts are semi-log!).

Abbey Joseph Cohen is calling for 1250/1300 by year end on the S&P, presumable Goldman is long.