German DAX week of October 5th, Muenchener Rueck, Dt.Post, Lufthansa, FMC

Fasten your seat belt. That was the motto of last week. What a ride.

As we said in the past weeks the DAX is on a sell trip and if you did not hedge your investment, well start to use candles.....

Since the beginning of 2014 the DAX goes to the side. He goes up and down between 9,700 and 9,000 points. It is not really the bear market a lot of journalist in Germany, i.e. Handelsblatt Online, expect since January, it is more money goes out of Germany.

Germany shot himself in the foot by setting up the sanctions against Russia. For an economy with traditional high export to Russia was the decision simply not clever. Now the German economy start to suffer and two major countries in Europe are in trouble: Germany and France. While it is meanwhile standard the southern part of Europe is in a bad shape, the ECB has major concerns and want to avoid a terrible development in the two big countries and will start QE.

The value of Euro is going to the south even more.

The chart shows very well how terrible the development of the Euro is. Is the Euro so terrible or is the Dollar simply to strong, gaining due to an uprising economy? Let us look to the GBP:

The Euro is loosing value against GBP for quite some time, even longer then in relation to US dollar. 

In conclusion an investment in German stocks has currently two risks. Firstly, a general down trend of German stocks as we can see on the first chart which might be stopped soon. Secondly, the value of an investment will be reduced by the exchange rate as well. From an investors point of view  an investment in Germany does not make sense . It might be helpful to push export but the big pension fonds from UK and US will not invest anymore in Germany and might even close investments to avoid further lost.

The ECB did what she can do to help the economy but the EU countries, the governments do not perform. In times of cheep money they are supposed to do investments to stimulate the economy and they don't. But the German government does not have any trained Economist at the minister level.

But how are our investments doing?

We recommended to close the most of positions. But we were still in favor for Muenchener Rueckversicherung. How did the do last week?

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The paper handled the situation very well compare to the rest but developed on Friday a sell signal. On Monday we might see a recover but according to the chart we have to be carefully.

Dt. Post was another company we were bullish. How did they do?

It looks like we were wrong in our assessment. The paper got a sell signal and goes to the South. We do not expect a change.

Weeks ago we said "hands off Lufthansa". How did they do?

As expected the chart continues to go to the South and we do not expect any change.

Is there any stock in Germany who should get our attention? We think yes: FMC might be a candidate.

Despite of growing since  July the stock was able to handle the last week very well. It looks like the MACD will have a buy signal soon, the DI+ is upper DI- but the strength indicator is still weak. but they are the best the DAX is offering right now.

But as always: just my 5 cents.......