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QUICK
LOOK REPORT #12: DAX Index
Background: Quick Look Reports will look at a possible dominant trend in an Index, Equity or Commodity and some possible long-term (yearly) trends which could emerge from the dominant cycle(s) (the dataset for #12 involved the daily closing prices). Quick Look Report # 12 looks at the daily closings of the DAX Index from 1990 thru Sept 2005 together with predictions for 2006. The secondary seven daily cycles in the DAX Index are: 17, 23, 30, 38, 48, 57 and 75 days. The seven primary daily cycles are 123, 190, 244, 310, 510, 775 and 1415 days. There may also a longwave cycle around/beyond 1800+ days but this dataset was not long enough to sufficiently resolve its phase. Chart 1 shows the actual daily closings in the DAX Index for the period from 1990 thru Sept 2005 The daily closings of DAX Index shows at maximum top in Oct 1999 and several significant bottoms. The slope of the trend line is similar to other major US indices such as S&P 500 and NYSE Composite Index over the same timeframe. Chart 2 shows the detrended daily closings as a filter sum of all the primary and secondary cycles in the DAX Index from 1990 thru Sept 2005. It shows major bottoms occurred in Feb 1993, May 1999 and Feb 2003. Chart 3 shows the comparison of the three largest daily cycles (1415, 775, 510 days) from 1990 thru Sept 2005 in the DAX Index. The major bottoms in the DAX Index occur when these cycles all bottom together (in phase). When this type of bottom occurs, it ignites a major rally in the DAX Index. These cycles reached a bottom together in Feb 1993, May 1999 and Feb 2003 (and it is predicted to happen again). The DAX Index may also be following cycles in the Euro Dollar but this, of course, is the subject for a future study. Chart 4 gives a prediction (detrended) for the DAX Index for 2006. The DAX is predicted to be starting a major downtrend which will continue through Oct 2006. It is strongly suggested to immediately take defensive action if you are holding equities in the DAX Index. This puppy is probably heading South. Particularly dangerous maybe the period from May 2006 thru Oct 2006 and this downside move also shows up in US Indices. Chart 5 presents the current waveform in the DAX Index predicted thru 2009. It shows the possibility of a major (secular bear) rally from Oct 2006 thru Nov 2007. However, the current major trend in the DAX Index is down. A major bottom in the DAX Index may occur in Oct/Nov 2006! Bottom Line: I do not like the DAX Index waveform in the period from Oct 2005 thru Nov 2006. It is showing the possibility of a major decline. There maybe a major rally left in the DAX Index in the next five years if the major bottom occurs in Oct/Nov 2006 with a final top in Nov 2007. We would avoid the DAX Index until Nov 2006 and see what develops.
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INFORMATION DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. |
