State of Dow Jones - Calendar Week 41 2021

State of Dow Jones - Calendar Week 41 2021 Welcome to the second episode of the blog post series "State of Dow Jones", where we look at the leading US stock index from different perspectives and try to determine how solid the current development is. Technical Chart for Dow Jones Every "State of Dow Jones" blog post should start with the technical chart, so here we go (created on The Dow Jones overcame the old falling highs and the important resistance at 25 000, now trading at 35 294 points. The index is trading above its SMA 20 again and even went into the upper Envelope band. This means the Dow is slightly overheated and it is likely that the index will show a small pull-back before rising again. The RSI is at 60, three trendlines were identified and crossed during the last trading days. The technical chart provides us with enough confidence to say that the correction might be over and the outlook is neutral, or maybe even slightly bullish. Marke

State of Dax - Calendar Week 34

State of DAX - Calendar Week 34

Another week has passed and we are looking again at the state of Germany's most important stock index, the DAX (30). I've put the number of index components behind the index name since this number will change soon. During mid September, the DAX will house 40 members and we are prepared to reflect this change in our tools and charts.

Nervertheless, we still do have 30 Dax members and we are now ready to check on what we call the "health state" of the DAX.

Quick overview: Market Breadth Data for DAX

Before digging through the market breadth data and what it means, we shall have a look at our huge chart dashboard, containing the most relevant market breadth indicators for the DAX:

DAX Market Breadth Visualization

Market Breadth for DAX: Deep dive

It has been an interesting trading week with only little to gain for the DAX. Despite the seasonality, this index is holding up pretty good and we've seen no big dumps so far. But what does the market breadth data tell us?

  • Advance Decline Line for DAX
    • The Advance Decline Line follows the DAX, supporting all trends
  • Advanced vs. Declined for DAX
    • The Advanced vs. Declined raw data for DAXis still moving within a narrow range, reflecting that we see neither big gains nor big losses
    • It is interesting to see that there is actually a range between 10 (top) and -16 (bottom) for ADV vs. DECL data

  • McClellan Oscillator for DAX
    • The McClellan Oscillator for DAX crossed the zero line, now having a negative value for third consecutive days
  • McClellan Summation Index for DAX
    • The McClellan Summation Index for DAX  has been above the zweo line for 10 consecutive days, but again staying below the value of 4 (similar to the positive period in June). This indicator is again moving towards the zero line
  • Percentage of DAX components trading above their SMA 50 
    •  ~ 53% of DAX members are above their SMA 50, which is slightly better than last week
  • Percentage of DAX components trading above their SMA 100 
    •  ~53% of DAX members are above their SMA 100, same as last week
  • Percentage of DAX components trading above their SMA 200
    • ~ 73% of DAX members are above their SMA 100, which is a small improvement compared to the last report on state of the DAX from last sunday

In total, I would say we see no big changes for the state of the DAX. There are small improvements and some changes for the worse. In my humble opinion, this only reflects that the DAX is again trading within a narrow range, which is actually good for a time of weak seasonality. 

Since we're at the end of the summer, I would not expect any huge gains from the DAX. Trading volumes tend to be lower in August and September, and bulls can be happy if there are no big sell offs despite geo political issues, the pandemic and the upcoming Tapering.

Looking at the traditional DAX chart (no screenshot here), we see the same: No big signs for a new rally begin, no big signs for sell-offs also.

In this situation, it usually makes sense to sit on the sideline and wait for explicit signals. I have no clear bullish signal for now and I would advise against going short while the primary trend of the DAX is pointing upwards.


Popular posts from this blog

State of DAX - Calendar Week 36

State of Dax - Calendar Week 31