On Monday this week we had a 500+ point candle and we could well see another after the weekend, but I couldn’t tell you the direction it will go. The four hour shows we are right in the middle of the bearish channel, plenty of room to move up or down and stay within the bounds, even if we get another big gap.
Some analysts predict Dax will get to 14k maybe even 15k assuming similar percentage gains to that of the SPX. Others bring us back to the Greece issue. The fact remains that low bond rates are pushing more people into equities and with ECB buying up billions every month, I suspect the trend will continue. Corrections and pullbacks will provide opportunities to buy more positions. If you are long, consider taking profits temporarily. If you are short, then be cautious of further moves before the correction happens.
So we are at the top of the rising trend channel on the daily chart, we are at the top of the rising trend channel on the 30 minute chart, we have seen a volume spike at 11350 on the 5 minute chart, we also have a potential fundamental catalyst today begin a pullback, with decisions on the Greece reforms. So there could be a bearish argument for today, especially as it’s Friday and the end of the month.
I mentioned yesterday a breakout over 11215 I would be long. We almost got it yesterday, but price retraced. Now we have it. I would love to see vertical movement to 11400 and I personally think that long term we could get to over 12000. It might take a few months, but just look at how much money is flowing into European equities right now.
Well, here is the obvious bit. Yes we are overbought, yes we are expensive, but this market wants to go one way right now and that is up. So instead of the usual format of report, I have suggested a few buying ideas to consider.
I think we are bullish so long as we trade above 10950 and I struggle to see price down there for the moment. Of course, if something unexpected happens, then so be it, but fears could be parked temporarily and we are soon to commence the proper money printing. We are at record highs and momentum is strong, it won’t last forever, but dip buying could be a great strategy.