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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.
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:
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?
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.
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