DAX

DAX update

Hamilton

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

DAX update

Hamilton

dax jan 19 2015

This morning the DAX shot up again to around 10253. A fairly clean triangle had developed over the past two months, now we are getting the “thrust”. This thrust should be good for about 1000 points given the size of the mouth of the triangle. As e bottomed at about 9600 that suggests about 10600 for a target. The apex is a month away at the most so a few more up days could do the trick.

By the way, EWG is not following the same pattern and is not even close to the peak.

DAX update

Hamilton

dax jan 12 2015

The DAX sports a similar triangle as discussed elsewhere ad nauseum. These triangles are invariable either in a 4th wave, or a b-wave position. (Alternatively they are misinterpreted as triangles but are, in reality, a series of 1-2’s). The different position depend on whether or not this wave up is part of a normal 5-wave sequence that subdivides in individual 5-wave minor waves or, whether we are in a wedge-like structure within which all the sub waves are 3-wave structures. Either way,if this is correct, we should get a thrust, or c wave up to at least 10500 and then the whole thing should more or less collapse. Do not trade on this. Neither the RSI or the MACD provide any meaningful clues.

DAX and EWG (repeat)

Hamilton

DAX aug 12 2014ewg aug 12 2014

Here we have the DAX, Germany’s main stock index and the Morgan Stanley IShares EWG. G, of course, stands for Germany. Why both? Well, I have noticed that often comparisons are made between the DAX and other indices , for instance the DOW, without regard to the type of index. The DAX is not some sort of über index that outperforms most of it’s peers, instead it is simple a total return index as a result of which it will normally show a higher value at most points in time. It has a base in 1987 at 1000 and for each year that passes it adds the dividend to the capital gain/loss to come up with a value. As with the DOW, there are 30 stocks in this index most of which are also represented in the EWG.

Presently the yield is roughly, very roughly, 4%. Since the highs of 2007, seven years have passed so, applying the above, very roughly again, the DAX should be higher by about 28% than the EWG is, not including compounding. In fact it is!

Having established that, what does it matter? A lot. Using the DAX Canadians are misguided into believing that their economy is inferior to that of Germany and that the proverbial  “Wirtschaftswunder” has passed it by entirely while we were building F150s instead of Benzes. Not so as you can see at a glance on the chart of the TSX;

TSX aug 12 2014

When the TSX is compared to the EWG, and not the DAX, the TSX actually outperforms relative to the 2007 (or 8) peak. You will notice that the two charts (you can move them around) are, again roughly, identical and both are clear B-waves that are signalling that a wave C is just around the corner. However, this time, it does look as if Germany is in the lead.