The charts are the same except for the time-frame. This is such an absolutely perfect parallelogram that I had to do it twice to be sure.
You DO NOT WANT TO OWN this stock right here. A few dollars higher perhaps all though you would be approaching the double-top level, always a dangerous place to stay. This is an excellent example of a B-wave and if it is the stock will go south rapidly.
Why you should not own the DAX (anymore).
1. You are 500 points away from the upper constraint line and 5000 points above the lower one. This is a 10 to 1 ratio against you.
2. The most probable count is that we are in a flat that ultimately targets about 3000. Even assuming the unlikely event (not seen anywhere else) that we are in a huge triangle the target is still 40% down from here to about 4800.
3. For some reason the DAX is the ONLY index to have performed so well so far. Even the EWG(see below) did not get close.It just narrowly exceeded our expectation of 62%.
4. No other European index did remotely as well as the DAX . Four examples follow;
The Swiss regained just 62% but the CAC40 managed only 40%. Italy did little better and Spain has been slumping again for a year. It is patently not clear how, if all these economies “converge” to some common denominator Germany can keep this performance going. If convergence does not occur the end result might just be a lot worse. Looking at Holland’s AEX, one of the “have” countries together with France and Germany, which is still only at a fraction of its highs makes the whole thing even less tenable.
This one dropped right on cue, but then came right back. In the big picture nothing has changed. Here is the updated chart;
The stock is topping. The next big move should be wave C down. See also Feb 11 blog, in which a $75 price target was suggested.
This stock has not crashed (yet?), in fact it stayed pretty well level for 6 months or so. This one is like a micro cosmos of the TSE itself. Depending on how you count the thing, we could continue up, or drop like a rock. Typically where you have an irregular b-wave (in blue), the subsequent C-wave drops below the start of the A-leg. This has not happened and may hint at a bullish resolution. On the other hand the drop from the actual top is a, relatively clear 5-wave affaire followed by an equally clear correction. This would favor the downside. The big picture, see previous blogs, also favor the downside.