TrendConcept Vermögensverwaltung, Dipl. Volkswirt Holger Peter Fuchs

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Anne Holland
6 years ago
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2 A declining variation at a middle level still indicates a technical consolidation in a downward trend. The stability of the DAX, with all three trend levels now positive, provides a good basis for an "attack" on the present downward trend line. In an international comparison of the trend-tracking structure, Germany dropped back into the lower mid-field during the past month, with 57% of stocks now on long. The mid-term upward trend according to Dow theory that started in 2011 (Friday closing prices) has been broken by the two falling lows since August From a mid-term viewpoint, we are still in a downward trend according to Dow theory, with falling highs and falling lows. For a genuine breakout above the line, the index would have to top the falling trend line above the two falling highs. Conclusion: With the variation curve falling, technically the DAX is still indicating a continuation of the complicated technical consolidation. The mid-term upward trend line according to Dow theory that started in 2011 is still suspended. The index has now once again narrowly topped the MAV40. For a genuine break-out attempt, the index needs to rise above the downward trend line showing the falling highs since April 2015 (currently around 10,500). With all three trend levels in the positive range, there is still a chance that this could happen.

DAX structure (unweighted) positive. 17 LONG / 13 SHORT 03.06.2016 The structure hardly changed over the past month and the timing of almost all stocks is completely neutral.

3 DAX structure (unweighted) positive. 17 LONG / 13 SHORT The structure hardly changed over the past month and the timing of almost all stocks is completely neutral. The present timing is of no effective use to anti-cyclical traders: there is only one weak trading situation - Adidas-Salomon, which currently has an overbought timing (+9).

The long/short structure of the DJ Eurostoxx 50 deteriorated considerably in May. The stock structure on page 1 shows that Italy was mainly responsible for the clear decline in the long structure.

4 The long/short structure of the DJ Eurostoxx 50 deteriorated considerably in May. The stock structure on page 1 shows that Italy was mainly responsible for the clear decline in the long structure. Two of the three trend levels are still negative. Looking at the timing situation, it is clear that despite the movement around the important 3,000 level, there are no technically striking situations. According to Dow theory, the index is still in a downward trend, which needs to move back above the MAV40 (currently around 3,122) if it is to narrow the technical gap to the situation in the USA. Conclusion: In the euro zone index, the mid-term upward trend based on Dow theory that started in 2011 is still suspended. Instead, there is now a downward trend corridor dating from April Taking a medium-term view, the present situation is still too unclear for massive market entry (>50% investment). Here too, topping the MAV40 (at present around 3,122 points) is a technical precondition for a trend reversal. The US market could nevertheless trigger a technical improvement in the situation here too.

5 Index structure (unweighted) negative: 21 LONG / 29 SHORT

Based on Friday closing prices, the Dow Jones Industrial has gained around 2.19% year-to-date. Here took, the mid-term upward trend line since 2011 is still broken.

6 Based on Friday closing prices, the Dow Jones Industrial has gained around 2.19% year-to-date. Here took, the mid-term upward trend line since 2011 is still broken. The rise in prices in April confirmed the positive technical development, with a break-out above the MAV40 and out of the downward Dow trend corridor to above the falling highs. However, the anticipated positive impact of a more stable equity market in the USA and the more healthy interest-rate situation of US treasuries has not yet had a particularly positive effect on other regions. Although the "price charts" are similar to those of the European markets, the three trend levels turned positive far earlier. Conclusion: The variation curve (mid-term volatility) is moving sideways/rising along with the successful break-out out of the downward Dow trend corridor. The technical trend in May still justifies a moderate increase in investment. However, a significant increase in investment should wait until the index has clearly topped 18,000 points with a rising variation, based on Friday prices.

With a rise of around 3.3% month-on-month, the Nikkei still does not have the strength to move above the MAV40 and the mid-term upward trend line that started in 2012 remains suspended.

7 With a rise of around 3.3% month-on-month, the Nikkei still does not have the strength to move above the MAV40 and the mid-term upward trend line that started in 2012 remains suspended. The variation cycle is falling, the downward trend corridor based on Dow theory which formed in January also remains in force. In terms of stock structure (see page 1), the Nikkei once again brings up the rear along with Italy (around 23%). It is left to the observer's imagination to identify fundamental reasons why these two countries are moving technically in parallel. Conclusion: Two of the three trend levels (spread to MAV40, status) are still broken, while the index continued to deliver a good price recovery over the month with a falling variation curve. Consequently, chart-oriented investors should initially wait and see how the variation curve and the index behave next time the MAV40 is reached before classing the market as "cheap" and upping their exposure to high.

8 During May, the Chinese equity market posted a rise similar to Europe's. Hong Kong remains at the head of the long list in the stock structure on page 1. The variation cycle (moving standard deviation) is still falling; like the US market, it topped the downward trend line above the falling highs back in March. One of the three trend levels (spread to MAV40) is broken, while the falling variation curve points to a continuation of the technical recovery. Conclusion: As a result of the falling reaction low caused by the crash in China, the index is still below the Dow trend corridor for the former bull market that started in Following the "sellout" at the start of 2016, the fact that in March the index topped the downward trend line that has been in place since May 2015 is a clear technical sign of hope. If the correction in China since April 2015 is an ABC correction, there would still be an anti-cyclical window for investors with an appetite for risk. The next hurdle is the sharply falling MAV40 at around points. A further recovery from the present level in China would also have a positive impact on the global equity markets.

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