(1) There was a perfect setup against key at 11,850 (blue line in Logarithmic). Obvious perfection often does not work > Solution: undershoot or overshoot. Here: Overshoot 4%.
(2) - At 12,208, the pattern since Dec14 is complete. Wave iv of 5 of V in Big III .
(3) Fibonacci - In those waves, Wave V = Wave III and wave v = wave iii
(4) Hidden – The red line on the chart below is probably very important (especially the way it was fitted in Jun14) – Likely to retain.
(5) R3 annual hit at 12,206 – That alone is a very important statistical target (note how the retained exactly in Jan15).
(6) ATR Band (proprietary indicator): the top band is at 11,700, there was a 5% excess. This is unlikely to get more stretched before some lateralisation and moving average catchup.
(8) We do not have a long lasting global phenomenon like in January 2000. This is only a DAX story for now.
(9) EURUSD which has been the initiator of this move is not marking new lows and could actually rebound from here.
(10) Unless SP500 breaks 2100 again, it is probably subject to a correction below 2000.
(11) Extremely News Flow this weekend given the close on Friday – Consistent with TOPS (necessary but not sufficient though).
(12) Time sequence – 26 days up in wave V – that is consistent with previous vertical climax since May13.
(13) Time Sequence – Last week completed 9 weeks vertical up – The likelyhood of a top or at least some weeks down is increasing.
(14) Progress: 46% From Oct14 to Mar15 (5 months) - Note that Big wave I was also 45% from Oct11 to Mar12 (5months).
Confirmation: trading below 11,800
Invalidation: trading above 12,450
My Pain Stop for now: 12,350
There is an excellent game plan here, better than at 11,850 and more complexe (so better).... But there is no certitude it wont move to 13,200 vertical.
The DAX is currently moving 400pts per week on average over the last 10weeks.
It means that over 2 weeks anything is possible really. You can make a killing or get smoked and that needs to be reflected the sizing or stops.
My thought process would be:
- So far, back in USD, SP500 is the best peformer and DAX the worst...
- From here a shakeout in equities could also occur with a shakeout in USD vs JPY and EUR.
- If you believe things will normalise in pricing, DAX has still a lot to catchup versus SP500.
It is difficult to conclude but after the next correction I think I would buy DAX but would watch EURUSD.
If DAX corrects while EURUSD Jumps back to 1.1800, I would buy DAX and hedge EURUSD at the same time.
In the big picture we may have some syncing process with europe catching up but I think the bulk of the rally is behind in time and price and we shall have either a large correction or at least some flat/down trading for a while until 2017.
Apple 150 yours
SP500 2150 yours
DAX 13000 yours
Biotech may have a last climax to very high levels in Sep15 but after that it may the end on all indices.
I think it is the end.
To be honest, i thought that in Oct13 and was wrong.... I had this idea in mind of July/Oct14.. it did not move much since that in USD, Sp500 is still in the same area and DAX computed in USD hardly moved but it is optically strong due to currency devaluation.
This virtual strength may last for a while and support the markets that are already on or close to target but overall I think we are due for a correction (be it flat: note that UK has not moved for 2 years now).
On the index from, as soon as FED increases its interest rate, DOWI and SPX may face a gentle correction as well as DAX FRA40 AEX. But because of ECB's QE, I think that after the gentle correction, until June 2016, we may see DAX at around 12600, FRA40 at 5500 and AEX at around 550 before a correction. DJI SPX are too high to continue to enter long, and DAX FRA may continue to benefit from ECB QE and cheap EUR until 1Q16
DAX 12,600 is next door, it could do it next week as the ATR is 400pts a week.
But I got your point, if they end up cutting rate (which is in the cartons as it stands) and if the QE in europe maintains rates very low or negative, in principle EURUSD should dive... and if it reaches 0.85 as you mentioned and if equities did not take a large hit in the US than we may see 13,500/14,000 especially if the bullish posture lasts until Jun16.
As per the timing my idea was:
- Correction 10% in the next 2months.
- Rally until Sep15.
- Resilience drift Until Feb16 and then 20% correction.
But things are crazy and I am not sure what's coming next. In the cartons:
- China trouble?
- Grexit that would bring Italie/Spain back in focus?
- OIl at 25 with higher tensions in Brasil/Russia?
- Oil disrupted by some crazy act of Isis.
- Other Geopolitical issues?
- QE failing in europe?
It seems the market got immune to risks but this may not last and real events may occur.
I like to know what news is encapsulated in each candle to be able to assess the energy available and see how different markets move relatively.
It is very interesting to see how negative the market was about Europe until the very last minute of QE announcement. It has magnified the effect in reverse of the desinflationary stance.
These QE are often much more impactful on equities than the crisis they come to fix.
(my BMADP is just a corrected Kairi indicator measureing the distance to the MA200)
Plus the dax is more the 300 points ABOVE the bollinger band top on a monthly chart....in my eyes it all cries for correction.