German and US stocks, DAX vs. SPX in short-term trading

Nothing much is changed from the things already written in last week Weekly Analyses, so going into a shortened trading week ahead of us, I made this blog different.


When we look at stock market indices, no matter is it DAX, SPX or something else, occasionally it is a good idea to take a look what leading stocks of those markets are doing. Leading, struggling or going down?


German market stocks - Linde, SAP, Allianz, Siemens, Bayer, BASF and large timeframes charts of DAX. Euro Stoxx 50 and Euro Stoxx 600 are in this 8 tweets thread.


FAANG stocks and Microsoft are in this 6 tweets thread.


Nothing is bearish there, in German and US markets. Some of the stocks, especially Apple and Microsoft are very extended, but to get a market correction - which would bring more volatility and more opportunity for short-term trading - we need to see breakdown of supports. Guessing tops will not make you money, and it is counterproductive. We will know when it starts, just like previous time. (I don't have any position in German or US markets, and trying to be unbiased here.) I have spoken. (Using the line from "The Mandalorian".)


DAX Vs SPX in short term trading


This two indices are not the same. Just like Metallica and Justin Bieber are not the same.

DAX is more volatile, SPX is more rotational. DAX is weaker - lagging behind, SPX is stronger - printing new ATHs. And, DAX is in my opinion, better for daytrading. Better, because it is much more two sided then SPX. Examples like this below, you can find many of them. Take entire 2017 as example. One sided SPX, two sided DAX.


ES_F


FDAX


We got a DMA50 test on DAX. That moving average is nowhere near the price on SPX.


Some thoughts about bulls and bears


IMO, both perma groups are toxic for traders, since they can influence your judgement. On last correction, that have ended in Dec 2018, perma bulls got killed during that 20% drop, constantly seeing bullish patterns and setups inside bearish environment. Bad time to buy a dip. Later, perma bears got killed. "Recession around the corner"... for years now. Seeing both parties running victory laps when they are right, and pretty quiet when they are wrong... If you are under influence of perma bulls, you will miss every sell opportunity, and probably got killed in corrections. If you are under influence of perma bears, you will miss every rally, since everything is expensive for you. Try to be unbiased, and decide are you a macro analyst, or trader. Fundamentals will give us direction, and technical analyses should give us inflection points. Entries and targets.

 

In short term trading it is very important to properly understand context heading into every day, to know from which side wind is blowing - who has the short term control, and which side will be forced to liquidate IF and WHEN market hold above or below a certain level. What is the level of volatility, what can we expect from any particular day, what market already done in premarket session, what possible setups can be available, and so on... the things that we constantly learn in the DAILY DOSE OF DAX.


Cheers, StrayDog