DAX update

DAX jan 23 2015

The DAX was up by about 260 points or so this morning, that is more than 2.5% (you need to hold a 10-year bund for about 4 years to get an equivalent return!) The peak was at about 10704, Stockcharts does not operate on a 24 hour basis so that does not show in the chart; it is approximately where the red line runs.

We had identified the triangle sometime ago, see previous blogs, but did not know exactly what would cause it. Delayed exuberance for Draghi’s opening of the European floodgates of money, super QE. Anyway this triangle is either a 4th or a B, we prefer the 4th but do not exclude the possibility of a B (problem is that we have to be able to trace a lot of waves before this to find a wedge). In any event if a 4th wave we are presently above the target of about 10600. Ofcourse the “thrust’’ could be bigger but that is not a reasonable expectation. In the event this is a B-wave the C could continue higher as indicated by the grey arrows. That could go another 500 points.  We are presently perpendicularly above the apex which makes for a good time to peak.

For some reason EWG is NOT following this script. It looks more like a rather bearish 1-2, 1-2.

ewg jan 25 2013