DAX H4: Too early for bears to enter? Fed did it again.

2 בפבר׳ 2023

Bears in Twitter start to ask themselves whether they were all wrong or they were too early to bet against the market after the Fed was hawkish-but-not-too-hawkish in yesterday's meeting. DAX is a heavily automotive, banks and other cyclic assets weighted European index. Europe has performed better than America, but if ECB decides to implement an even more hawkish strategy than that of the Fed, those "better European gains" will vanish relatively soon. That is why, together with the current economic, political and social-unrest context; I am beginning to feel bearish on DAX and CAC. DAX could be shaping a H&S pattern the next days that could end up pretty bad if inflation does not calm down, ECB continues to raise rates and unemployment increases.

Therefore, my prediction is that DAX will not reach ATHs and stay around 15580-16250 to drop later on to 11350-13350.

Could there be again a Head and Shoulders on its way?

9 בפבר׳ 2023

הערה

There is a lot of euphoria at the moment, and even though the average PER in DAX is 20.77 without considering outliers above 100 or negative PERs, it might surpass the TTM PER of S&P 500 (6/2/2023) 21.96. Which would mean that either 2022 remaining earnings to be published are lower or that share prices from companies within DAX increase on average 5.73%, giving DAX a new potential value of ~16282.42 (15400*1.0573). Which I would not believe it.

But 4 days ago, we experienced the most significant short covering by hedge funds in 6 years.

And mainstream media keep posting a catastrophic downslide on world's major indexes. Good news are bad news and viceversa.

Also, a comment from another forum was quite interesting: "All this euphoria because inflation might be peaking surely thats a sign to sell as we've been going up and up on high inflation, wars and all bad news. So good news should do the opposite!"