Neither in the Nasdaq 100 nor in the DAX do the bears take their chance

Last Friday, the Nasdaq Composite closed a second day in a row below the previous day’s closing price. In this respect it is actually hardly anything special, but apparently already in the current exaggeration. The last time this stock index closed on two consecutive days below the previous day’s closing price was on May 12 and 13 (see red ellipse in the following chart). And there are 49 days in between.

The Nasdaq Composite was first released on February 5, 1971. And such a series, in which this index did not close for a comparatively long time on two days in a row below the closing price on the previous day, was last seen in 1978 – the year I was born. That was 42 years ago. And so we have the next superlative in the current price recovery, which is rather bearish in the sense of an exaggeration. More and more warning signals are lined up.

Nasdaq 100 consolidates trend-confirming at a high level

But despite all the warning signals, both in terms of the records set in the context of the corona crisis and the fundamental development that the stock prices have clearly outstripped (see also stock exchange internal from Tuesday this week), the bears cannot currently assert themselves sustainably. The bears have not yet taken advantage of the opportunity that the double-top formation in the short-term range at the 11,000 mark in the Nasdaq 100 gave (see last Friday’s internal exchange). Instead, the sideways or moderately downward consolidation has established itself (yellow in the following chart), which I alternatively showed on Friday.

Nasdaq 100 - short term chart analysis

Since such consolidations are considered trend-confirming, the chart picture in the Nasdaq 100, although extremely overbought, is still clearly bullish. That only changes when the index clears the consolidation downwards, if possible with dynamically falling prices.

Even in the DAX, the bears don’t take their chance

The same applies to the DAX. The leading German index broke important support lines and thus sent bearish signals – the uptrend channel (green lines in the following chart) was left and at the same time there was a break out of the bear wedge (blue lines).

DAX - target trend analysis

But here too there was only consolidation instead of connection losses. On July 16, I wrote on the following chart that it was “possibly a volatile sideways movement could occur again at the high of June 8th – it would then be the third in the current upward trend“. After the erroneous breakout on the top of the bear wedge, it still seems to be happening (see upper yellow ellipse).

DAX - short-term chart analysis

However, if the DAX can recapture the midline at 12,945 points and thus overcome the high of June 8 again, the bulls will have the advantage again and the bears would have missed a very good chance. However, if the rectangle boundary at 12,590 points and thus the area of ​​the previous consolidation (lower yellow ellipse in the 30-minute chart) is run down, a second correction wave could have started.

I wish you much success in trading
Sven Weisenhaus


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