German DAX; week of December 15th;

On December 4th the DAX developed a sell signal and the  chart went to the South. Everybody was talking about years end rally. Handelsblatt Online, our favorite German Newspaper was talking about 9400 point at the end of the year. We got that on December 2nd and the chart started his years end correction.

  

If the correction will continue we might see the DAX in the area of 8.800 at the end of the year. But he will be still in his trend channel  and their is no reason to be concerned. We have seen such a correction in June where the index went from the upper line to the lower line of his channel. It worked fine for the rest of the year.

The FED will have a meeting later the week and every Tom, Dick and Harry is again talking about tapering. We really can not understand the whole discussion. It is like they do want to have a tapering. The FED explained more than once what they indent to do or not to do until  the economy is back on track. The US economy is still on shacking ground. We do have our doubt a tapering will start this year.  We do not expect a major change this year or better next two weeks.

The conclusion of this is the correction will continue but that certainly does not have anything to do with the FED. The Commercial Traders / Investors will prepare for the years end and will bring the profit home. No more risk in the last two weeks. A lot of retail investors might think in the very same direction.

Looking at specific DAX companies there is really nothing to talk about. They are all more or less in a sell mode and due to the above we think it is not OK to start now an investment. But we might be totally wrong and on Wednesday, after the FED meeting, the stock market  will reach out for the sky.

As always: just my 5 cents......