Tag Archives: Dax

31 May

This weeks analysis

I have enjoyed a rare Monday off work. The UK had one its dozen or so bank holidays today, and the US markets were closed for Memorial Day.

It meant an opportunity to sleep a little longer and take a long walk along the beach and reflect on life in general.

I grabbed my phone and called as many UK friends as I could get hold of. The mission was simple. What are you going to vote on the 23rd June?

My phone reveals I called 17 friends (I thank them for letting me disturb them on their Bank Holiday Monday – a very sacred day in the British calendar – a day where you can with justifiable reason get pissed on a Sunday night without remorse).

Of the 17 people I called, who predominately are financial professionals, there were not a single one of them who would vote to stay in the EU. I was quite surprised, so when I pressed for a reason, I got the same answer over and over:

  1. Emigration Concerns
  2. Bureaucracy

Most of them felt there was something very disconcerting about the whole campaign. “It feels like scaremongering rather than a democratic debate”, one said.

Amen. I am not allowed to vote naturally, so I can stand aside and observe my poor friends attempting to sort shit from channel. AND there is a lot of the former.

Those two points above don’t actually have much to do with the original plan for a Common Union. The Union was intended to increase trade flow and thereby also competition and it did. The emigration concern is a another point altogether, one that reflects a growing concern of democratic impotence, as a super power beyond reach decides from afar what is right and what is wrong.

The Brits are individuals. They always have been. Someone should remind them in what dire straits they were in during the 1970’s despite their membership of the union, and how they sorted themselves out in the 1980’s under a certain Iron Lady. That had nothing to do with the EU, and everything to do with the spirit of a United Kingdom.

In the Financial Times I found a quote from Nifco’s Mr Matthews: why would Britain even contemplate leaving the EU. You have enough challenges in business as it is. Why would you put yourself in a more difficult position?

Yes, indeed. Why would you? May I offer an answer? Because life is more than just business, and the EU has moved from being just about business, to being about what you can and can’t buy, what you have to wear and what you can’t wear:

http://www.dailymail.co.uk/health/article-186684/EU-outlaw-popular-vitamins.html

https://fullfact.org/europe/eu-banning-high-heels-hairdressers/

and then there was the one about the bent bananas:

http://www.telegraph.co.uk/news/worldnews/europe/2453204/Bent-banana-and-curved-cucumber-rules-dropped-by-EU.html

I was asked what I would vote. I said I had not made up my mind. However, for those Brits who are reading this blog (the reason I write it in English is so both the super intelligent Danes with their amazing language abilities (!) and the “why would I need to learn another language – you all speak English” Brits – can read it) I would like to take this opportunity to remind you of a few things:

  1. You were great before the EU. You joined in 1973 with Denmark and Ireland. If you vote to stay, you may just risk that you will slowly and surely be stripped of your ability to self-regulate. Did you see this one: http://www.dailysquib.co.uk/business/19041-eu-wide-tax-id-numbers-planned-keeping-track-of-every-citizen-in-europe.html
  2. Do you ever wonder how Norway and Switzerland have managed to stay so wealthy? Norway is the 6th richest country in the world (oil), and Switzerland is number 10. Denmark is number 21 while Britain is number 27.Norway and the Swiss refuse to be part of the EU. They are doing fine!

Enough said. It is not that I don’t see the argument for a union. It is the argument that I am unable to decide what I do in my own house, because I have signed up for a union which is SO MUCH MORE than just a trade union. It is a union on how to live my life.

This week will be explosive. We have the end of the month coming up. We have a banking sector which is beginning to move in anticipation of a rate hiking cycle in the US. Deutsche Bank has rallied 20% in the last week!!!

We have a Non-Farm Payroll release on Friday; one of the most eagerly anticipated numbers all year, now that the rhetoric from the central bankers of the US is heating up, agitating for a rate hike.

You also have the ECB talking on Wednesday.

How do I stand? After the strong rally off the lows in the DAX index, I think we will see higher prices going into June. I think the market is ready to begin a protracted rally into September, as long as the fundamentals (Friday!) can substantiate it.

03 May

Looking ahead

Apologies for the lack of update yesterday. It was a holiday here in Spain, and I decided to take advantage of a break from the screen and soak up some sunshine.

We have an interesting week ahead of us, mainly because you have holidays in many places. Denmark for example will be off Thursday and Friday. Japan is off Wednesday and Thursday, and Germany and France and Swiss have a bank holiday Thursday.

3 maj 2016 2

RED FLAG EVENTS THIS WEEK

 

The all-important event – well take your pick – but I will be looking ahead to the Non-Farm Payroll out of the US on Friday. I will discuss this later in the week. For now – let’s look ahead to today:

Sometimes you get an indication of what is going to happen in Europe by looking at Asia. Today it is quite a mixed bag:

3 maj 2016

The DAX charts below show the DAX without volume and then with volume. Why are there two charts? I wanted to demonstrate to you that volume can be a great additional tool to your analysis, BUT it doesn’t have to be included if you can interpret the price action instead.

Chart number one, below, shows the DAX on a 30min chart for the last 6 days. It does take a wise man to see the DAX is trending lower, and you should be selling rallies, as long as we trade below 10,150.

3rd May 2016 3

DAX is trending lower, and has failed to hold on to 10,400

The second chart looks at the volume pattern for the last 6 days. There is something in particular that I want you to be aware of, which happened during the timeframe I am zooming in on.

3rd May 2016 4

DAX with volume figures – notice the volume increases on the sell-offs, and remain flat on the rallies.

If you zoom in on the middle part of the chart (see below), you will see a favourite pattern of mine. I call it the Trap Door. Notice how the DAX makes a great recovery, and price goes above the morning high. Notice also how volume doesn’t confirm this, because it is running at a lower high. This in itself is only cause for concern – not an all-out sell signal, but then notice the market selling off BELOW that last price spike bar. This is a Trap Door sell, and it means I will remain bearish as long as DAX is trading below 10,300.

dax fake volume

DAX Fake Move = Trap Door

3rd May 2016 5

Dow lost and regained 17800 very quickly

The next chart is the Dow – above. I betted heavily on the Dow falling last week and I won big. Now I have to contend with the fact that the Dow has regained what it lost, and it did it the day after. So it changes the playing field today. So far the DAX is relatively flat, but I am watching for signs of strength or weakness in the early going. It is the beginning of a new month, and the way the Dow traded yesterday will have me alert to abandoning my bearish stance. So far I will still hold on to my bearish view. One rally will not have me change my mind.

Have a nice day.

Tom Hougaard
Tom Hougaard

25 Apr

Dow DAX and Yen

Monday 25 April 2016

I will start with the Dollar Yen. After the surprise attack by the central bank to weaken the yen last week, I thought it would be good to look at the chart. Naturally I am long dollar yen, after the chart pattern I posted last week (http://tomhougaard.dk/dollar-yen-alert-too-late-but-for-next-time/), but the chart doesn’t look at all so rosy. So there is conflict.

  1. I have a 61% fib resistance at the top (negative)
  2. I have a surge higher (positive)
  3. I have no obvious sell signals but overall the trend looks negative (negative)
  4. The market has made it back into the trading range. Anyone who has been short from this range will see profits evaporate now. The central bank has flexed its muscles (positive).
  5. The retracements have been more or less harmonious, but this can be interpreted both as positive and negative. The moves since last week has been orderly after the impulse up, and it has paid off to buy dips (positive), but the really big picture shows exactly the same pattern of big rallies before big declines in a big down-trend, so I have to accept that the bears are not dead (negative).

So what do you do? You take your bet. I will put most emphasis on the most recent developments, and I am therefore a buyer of Dollar Yen around this level of 111.10.

dollar yen 25 april 2016

Dollar Yen 240 min chart

The Dow is interesting. I have a SELL signal using a mechanical method on the daily chart. This coincides with my time cycle chart too. Nevertheless I am not rushing out to sell short the Dow in big quantities. I have to be patient because I haven’t seen any damaging weakness yet. Maybe it will come this week, but what is more interesting for me is to discuss what I will have to see to be PROVEN WRONG.

I will need to see the Dow close above the highs of last week, preferably at the end of the week (or any weekly close above last week’s highs). Until I see that I will remain negative, but I will naturally be flexible in my trading during the week.

dow 25 april 2016
Dow Jones index Daily Chart

 

You can’t have Dow and not discuss the DAX. The DAX index still looks good. The first chart is the hourly chart, and it shows how well DAX is holding 10350. On the second chart you see the big picture. The big picture is bullish.

How do I trade this? I need to accept that the Dax looks better than the Dow, and until I see weakness in either index, I will have to accept that I am bullish from the charts, but I am quite bearish from a time cycle and a fundamental perspective. As always I will trade WHAT I SEE, and NOT WHAT I THINK.

dax 25 april 2016 small time frame

DAX 1 hour chart – notice how it is holding on to gains from the rally. This is positive

dax 25 april 2016

The Daily chart is most certainly also positive, so you have a conflict between the DAX and the Dow.

Tom Hougaard
Tom Hougaard

15 Apr

Stellar week for the DAX

Good morning,

China’s GDP roughly came in line with expectations – IF YOU BELIEVE the numbers are in fact true.

Dow chart 150

Dip buyers are keeping DAX higher

It has been a stellar week for the DAX, adding plus 400 points. The dips have been very moderate, about 40 points. I suspect I will focus on buying DAX dips. Its Friday, so I am not expecting anyone to change the trend majorly on a big up-week.

The BIG PICTURE looks very interesting. I have a FIBONACCI TIME CALL for a high in stock indices. The chart below would suggest that I will be right or wrong very quickly. Its simply a matter of taking your pick, chose your side.

Are we continuing up or are we headed back down again? I have made my longer term call, but in between I will carry on trading during the day, AND KEEP THE TWO CAMPS (INTRA-DAY and LONG-TERM CALL) SEPERATE.

Dow chart 149

Dax Daily – its make or break time

The last chart is the FTSE. It is the kind of chart that makes me wonder if my BIG CALL is right. This looks like a great BREAKOUT TRADE to me. It has a pretty decent target on it too. We are talking another 450 points higher in the next few months. It is for this reason that I am not breaking out in a sweat over my big call. There will be plenty of time to jump on board, if we don’t see markets back off in the next week.

FTSE 100 BREAKOUT???

FTSE 100 BREAKOUT???

HAVE A GREAT WEEKEND

Tom Hougaard
Tom Hougaard

12 Apr

12 April 2016 – thoughts ahead of the day

In my weekend analysis I wrote that I was bearish stock indices. I based that opinion on a method I have developed over the years. I have used it to forecast many tops and lows over the last 15 years. The forecast is based on weekly charts, so I am not too concerned what happens intra-day. This method is used to trade the big moves.

So going into the trading day Monday (yesterday) I knew that this week could be the beginning of a very substantial move down. I immediately started shorting indices yesterday morning, and I thought I was going to get rewarded for my boldness. That was not to be. Someone somewhere said something. Who know what they said, but the effect was obvious. The market reversed on a dime, and the DAX was strong all day.

The Dow took its cue from the DAX and it too rallied most of the afternoon. It is during times like that you begin to question your forecast. It is also during times like that – that you have to remind yourself that the forecast is based on weekly charts, so it should not matter what happens from minute to minute intra-day.

This leads me to the point of this story: who is buying? Who is it that is buying? How many times over the last week of trading have I seen a very strong open in the Dow, and then it all just fizzles. The Dow probably should be stronger. The dollar is strong, albeit a little weaker over the last 10 days. Oil is recovering well. Yet whoever it is that is pushing the Dow up during the first hour hasn’t got the ability to keep it there.

Monday’s trading session was bad news for the optimists. There are no buyers above 17,700. Now we are 150 points lower again, and my forecast is looking better. I digress. Let us trade the market, and not the forecast. Anyone can forecast, even me, by flipping a coin, and calling heads bullish and tails bearish.

There is no traction in the Dow above 17,700.

There is no traction in the Dow above 17,700.

Instead let us understand what is going on underneath “the bonnet of the car”, so to speak. Stocks got what they want, didn’t they?

  1. Central banks are behind them – supporting them
  2. Oil is recovering well – another $10 and it has doubled since the low of $25
  3. There is so much worry about earnings, yet the Dow is sat just a few hundred points from an all-time high.

And yet we keep failing at the most critical times, like today. AND why is Gold so strong? WHY is YEN so popular (safe heaven).

11 April 2016 Dax index 30 min chart

The DAX index is displaying perfect harmonic moves, which suggest we are headed back down to the lows.

Conversely, we keep “failing” – or not failing, as it is – just as the markets look like they are about to free-fall. Something is still supporting the market. It is turning out to be quite the tug-of-war, and I think the earnings season will force a solution.

Here is my position: I have put on long-term short positions in stock indices. I have a sell signal, and I have executed the plan. In between I will trade in and out of the market day trading style, like a good student of the markets.

I will talk to you again tomorrow.

Tom Hougaard

Tom Hougaard