The performance of the German DAX has only one direction since June 2012: To the North.... The index created a channel and despite of times where investors realized profit the over all performance was quite good.
Last Friday the performance dropped by 2%. The index felt out of the inclining channel and question is will it continue or will the index go back into the channel. On March 25th the chart already created a sell signal, created a SAR sell signal after touching the upper channel line on March 15th. But why this drop of 2%?
When the stock market in Germany opened on Friday everything was OK. The drop started when extended trading started in US around 11:50, midday. But after the initial very low start in US the Dow continued to recover and got finally just a reduction of 0.28%. The bad news about jobs in US which leaded to the bad performance where apparently not too bad. But for the German market is was to late. The sell off was done within a few minutes and there were not enough buying power to cover that. In addition it was the week after Eastern and a lot of investors were on vacation. Do not forget they have 6 weeks vacation a year.
What will happen next week? I can foresee another dropping but certainly not as we could see last Friday. Over all I expect the DAX to go back into his channel next week. I do not see a major change in the economy. The climate in US is getting better and the little man in Korea, well, a barking dog does not bite.
but as always: just my 5 cents
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