The Dax’s performance is absolutely fascinating. At the recent high of 11465 it was up 37% in 4 1/2 months. In a very crude way I have figured out that there were only three previous occasions where the Dax may have performed in a similar super bullish fashion. The little purple arrows, all equally long (but this is not a semi-log chart!) indicate where and when those events might have occurred. In every case it would have been a 5th wave ( but not always the same degree). In both the two previous occasions the advance is immediately erased! They are separately shown below;

Only the one starting in late ’99 and early ‘00 is comparable in duration and size (smaller in absolute terms but bigger as a percentage). It too appears to be a “thrust” out of a triangle and peaking just above the apex. Note that after that peak the Dax has it’s biggest drop ever, both absolute and as a percentage, losing roughly 3/4 of it’s value.

     Will history repeat itself ? Mostly it does as otherwise pattern recognition would be a useless endeavour, which , perhaps , it is.

Then – Jan 23, 2015, a month ago – and now.

We, of course, did not expect the extreme possibility to occur, perhaps we should have. Everything seems to go as far as it possible can. In any event we are now within a day (or two) of that point where the c equals the a as a vector. The RSI has crept up into overbought territory and the MACD is languishing for more than a month now. This is a 36% gain in 4 1/2 months!

PS With today’s high at 11,401.66 we are there as far as I can tell.

Just in the past week or so we had the Russians come out with a surprise drop in their interest rates, the Aussies followed suit and again today the Chinese are supposedly freeing their banks from certain reserves, all this for the general good. The Greeks promised to behave and everybody believes them. To top it all off our prime minister is meeting with Mrs. Merkel right here in Canada. Refreshing winds are blowing everywhere and this is a good time for the Dax to peak.

Now that Stockcharts is updated we can show the DAX properly. Apparently it was also the 25-year birthday of its existence, what a fitting moment to peak. The chart below shows the performance over that period;

It should not be forgotten that the Dax is a total-return index and includes dividends etc.