Markets

DAX® – Gap controlled: It will be exciting

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Gap controlled: It will be exciting!

Yesterday, the DAX® was able to continue its course of the last few days seamlessly. Thanks to the recapture of the 13,000 mark or the break in the short-term correction trend (currently at 13,015 points), the last attempted breakout is currently running on the upside. The threshold that is crucial for the chart continues to define the old downward gap of September 21. The share barometer already ran into this price gap yesterday (upper gap edge at 13,116 points). A complete closing of this price gap – combined with a negation of the September trailing edge – represents a great opportunity for the DAX® to actually use the seasonally favorable phase in the 4th quarter. If the breakout is successful, the German “blue chips” will run up to the high of the beginning of September at 13,460 points. Tailwind is mainly coming from the USA: yesterday we pointed out the new all-time high for the Dow Jones Transportation® (see detailed analysis below). At the same time, the S&P 500® was able to regain the key brand of 3,400 points. The framework conditions are therefore right – and the DAX® should ultimately be able to capitalize on them.

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DAX® (Daily)

Chart DAX®

Source: Refinitiv, tradesignal

With a new all-time high

Yesterday, as part of the DAX® analysis, we only briefly discussed the development of the Dow Jones Transportation®. Since we consider the course of the transport stocks to be one of the absolute key charts of the 4th quarter, we want to take a closer look at the technical situation today. With 11,786 points, a new all-time high is now on the books. The new record level has even more implications than the mere foray into “uncharted territory”: over the past two and a half years, market participants have repeatedly lost their courage in the area of ​​horizontal hurdles between 11,359 and 11,624 points. Thanks to the new record high, this lid has now been lifted, so that a procyclical investment buy signal is generated. At the same time, the sharp drop in price in spring and the subsequent recovery can be interpreted as a V-shaped price pattern (see chart). The 138.2% fibonacci projection of the correction impulse from January to March (13,223 points) defines one of the few remaining starting points. In order to avoid the risk of a false breakout on the upper side, the Dow Jones Transportation® should no longer fall below the “swing low” at 10,941 points in the future.

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Dow Jones Transportation (Weekly)

Chart Dow Jones Transportation

Source: Refinitiv, tradesignal

As if pulled on a string

Analogous to the Nasdaq Comp.®, the PayPal share also recently took a little break. Previously, the stock has gone from one high to the next, pushing its all-time high to $ 212.45. Despite the described breathing, one of our favorite approaches, which combines the concept of relative strength according to Levy with trend-following and money management aspects of the Kelly factor, continues to signal the “green light”. In constructive terms, we also assess in this context that the trend dynamization in the form of a breakout from the old base upward trend channel (upper limit current at USD 178.31) remains unchanged. On balance, the rally of the last few days should therefore continue. The above An all-time high defines an initial target, before the parallel to the steeper bull market (currently at USD 228.43) comes into focus. But also from a risk point of view, the current price trend is currently providing investors with important support. The corresponding lower channel limit (currently at 178.31 USD) is predestined as a stop loss to secure profits from old commitments or to secure new long positions.

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PayPal (Weekly)

Chart PayPal

Source: Refinitiv, tradesignal

Change for the better?

For fans of countercyclical trading ideas, it might be worth taking a look at Under Armor’s shares right now. Countercyclical, because behind the title lies a drought of more than five years. This bad weather phase may now be coming to an end, as a stabilization process has been taking place since March. In this context, we consider the recovery of the low from the end of 2017 at USD 11.40 as well as the 38-week line (currently also at USD 11.40) to be constructive. From a technical chart point of view, however, a sustained spurt over the accumulation resistance at a good 12 USD is necessary for a final break. A Fibonacci level (USD 12.00) coincides with the last highs and the downward price gap from March (upper gap edge at USD 12.49) (see chart). In the event of success, investors can assume a lower reversal, which has an imputed follow-up potential of around USD 5. The constructive positioning within the framework of the “HSBC Trend Compass” and the downward trend breaks in the course of various indicators (e.g. RSI, MACD) underline the ongoing tide change. In order to maintain the chance of a breakout, the share should no longer fall below the above 2017 lows fall back.

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Under Armor (Weekly)

Chart Under Armor

Source: Refinitiv, tradesignal

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