State of Dow Jones - Calendar Week 41 2021

Image
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 tradingview.com): 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 - Calender Week 40

Welcome to another episode of the blog post series

State of DAX for Calender Week 40

October (or is it UPTOBER!11 ?) has already seen six trading days. The DAX went through difficult times during the last weeks, so it will be really interesting to determine the current state of the German leading stock index.

Technical Chart for DAX

Total gains/losses for DAX in October so far: ~ + 0,3% (XETRA)
Here is the current technical chart for DAX, created on tradingview.com:


This chart shows that the index has been moving between the wide range of 14 800 and 16 000 points since March. The all-time high was accomplished on Aug 13, and since then, the DAX has only know one direction - downwards.

We've seen a number of falling highs, which means that we are inside of a correction. If this correction stays a healthy correction or becomes something worse, is not yet decided. On Oct 06, the lowest low since May was reached and the DAX has made some minor attempts to recover. The SMA 200 with a tolerance band of 1% (green band in the chart) shows that the price accepted this SMA as a support. It will be interesting to see if the index continues to stay above the SMA 200. For now, the level around 14 800 also acts as a support, and having this "cross support" (SMA 200, support at 14 800) might help to lure enough buyers.
 
Currently, the DAX is still below the SMA 20, but no longer oversold due to the Envelope bands.
The RSI is still below 50.
 
Overall, from a technical point of view, the DAX looks bearish as long as it does not trade above its SMA20 and above 15 400 and than 15 700. It is important to beat the lower highs to send bullish signals.


Market Breadth Data for DAX

After we've looked at the technical perspective, we should consider the market breadth data for DAX40:

 
The Advance Decline Line shows no divergence - it supports the current price movement.
 
The McClellan Oscillator for DAX stayed above the recent lows and rised above the zero line for one day. During Friday, the index went below the zero line again.
At the moment, the McClellan Oscillator can be considered as slightly bearish and it might soon become neutral.

The McClellan Summation Index declined even further, so there is no relief yet. This indicator is still bearish.


For now, market breadth data gives no clear signal for relief and it reflects the current weak state of the DAX.


Market breadth for DAX: % of members above their SMAs

A look at market breadth would not be complete without looking at how many members/components of the DAX40 trade above their SMA50, SMA 100 and SMA200:


 
Currently, 25% of the DAX components are above their SMA50 (last week: 15%). 
Currently, 37,5% of the DAX components are above their SMA100 (last week: 27,5%).
Currently, 60% of the DAX components are above their SMA200 (last week: 60%).
 
 
Those are some interesting numbers. The numbers of DAX components trading above their SMA 200 should remain above 50%, otherwise the long-term trend would not be positive. This is currently given.
 
The change for the percentage of DAX members trading above their SMA 50 and SMA 100 actually rised again, which is a small sign of recovery.  The values in total are still weak, though, reflecting the ongoing correction. However, it is a good thing that they moved away from the extreme levels as we've seen them in last November also.
 
 

To illustrate the current state of the DAX further, here is a zoomed version of the chart above, showing only the time range from Apr 08 until last Friday:
 
The decline in market breadth is clear on this chart. Just to give you an impression where we are coming from:
On Apr 08, the following percentage of DAX components were trading above their SMAs:
  • 86,67% were above their SMA50
  • 86,67% were above their SMA 100
  • 90% were above their SMA 200

 That some momentum was lost is visible when comparing the numbers of the SMA 200 and SMA 50: While the numbers of DAX components above their SMA 200 were relatively stable, the value for DAX members above their SMA 50 declined sharply. The ongoing correction began when the numbers of members trading above their SMA 50 and 100 failed to rise above the old high from Jul 12:


Summary

Technically and according to market breadth, the ongoing correction is still ..ehm.. ongoing :-)  There is no clear signal that the correction will end soon, however, some of the market breadth data shows signs of stabilization.
The next week will shed more light if a bottom is being formed.
 
 
 







Comments

Popular posts from this blog

State of DAX - Calendar Week 36

State of Dax - Calendar Week 31