DAX update.

The usual then, March 4 , 2015, and now and now charts;

DAX mar 4 2015 bDax june 4 2017

dax june 2017 bc

The is, ofcourse, a total return index so contrary to, for instance the Dow, the value of the Dax should increase by the dividends and the price appreciation of the stocks. It should therefore record relatively higher values than most other indexes.

Recently I was reading somebody else’ take on the Dax. The argument was that we are in a contracting diagonal triangle, shown in red in the semi-log chart on the right. This may well be correct but it differs from what I thought was going on some two years ago, which is a triangle with a thrust to slightly under 12000. Initially that worked out quite well as the did turn at about that time and dropped some 5000 points or >40%. But then the Dax turned around again and recouped all the losses and then some. One explanation could be that the “thrust” having started with a 1-2, 1-2, only completed a wave 3 and needed a 4 and 5 before completing.

In any event looking at it today, I still prefer the triangle interpretation but that has become somewhat irrelevant as regardless of whether or not the diagonal or the triangle are operative, the is very close to peaking. The triangles mouth measurement, applied from the point of the e-wave (about 8000 points) suggests a peak at around 13000 to 13250. Under both scenarios, as always, the ultimate target is the level of the 4th wave of previous degree or roughly 2000. When is always a little more difficult but this index should turn soon as in days or weeks but not months.

By the way, had you bought right at the top of the tech bubble in 2000, your total return to date is still less than 4% per annum. That includes the dividends of about 2%!