German DAX; week of February 9th; SAP. Volkswagen

Was that all? Was that the famous and fearful expected correction everyone was talking about? The correction who will bring our culture down, the correction who will finally bomb us back to the 1920th of last century?

It looks like the economy is too good to go down this road and changed again the direction back into the channel. The channel is still positive. Will it continue? We think so and refer to news like we could read a few days ago: Germany achieved again a positive trade surplus last year, bigger then ever. The world economy in a sentence: Germany produce machines, the Chinese need to produce products for the US paid with their credit cards......

It was certainly a correction in a very short time and a lot of investors got nervous including us. We sold just to go back in again a few days later. But why this reaction? We did have corrections earlier in 2013 and we did not  react like this.

 As we can see we did have three corrections during the last 12 months and the current one was the smallest one. Again, what was different this time? 

This time every Tom, Dick and Harry was talking about a correction. They asked for it and they got it. It was like the media did not have anything else to report and they wrote about the correction. Of course they studied journalism, they know how to write  a good story, but have quite often no or only little know how about economy. We cannot recall that they wrote in a same manner in April or June about a correction. In those days they were still exited  about how good the stock market was.

But where to invest next week? There is really not a single title where our trade system will suggest to go long. We can see quite some companies where in a few days, if the current trend will continue, we will see a buy signal. SAP is such a candidate or Volkswagen. But currently their indicators do not suggest a buy. DI- is far above DI+.

The only German stock where our trade system suggest a buy is Sky Deutschland AG. But the strength indicator ADX is going to the South. 

So, we suggest to hold fire. We are confident in a few days things will change. Or we are totally wrong and next week will be doom day and everything will go to the South. Positive thinking is necessary: it will get better.

But as always: just my 5 cents