I'm Calling The Top In The DAX

Last month, I called the top in the FTSE 100,

I'm Calling The Top In The FTSE 100

A third of FTSE-listed general retailers have issued profit warnings so far this year, according to research by EY highlighting the growing strain on the sector. EY also warned that retailers face rises in business rates on their property and higher labour costs.

Travel and leisure companies have also been under pressure with a quarter of FTSE-listed firms in the sector issuing profit alerts.

'Renewed weakness in sterling or disruption to food or labour supply linked to Brexit could trigger a further wave of profit warnings,' EY added.

Now, I’m calling the top in the DAX.

Last week, the final GDP result showed a decline of 0.2% in the third quarter, in line with expectations, but marked the first decline since 2014.

Source

Manufacturing PMI fell to 51.6, this marked a fourth straight drop in manufacturing activity.

Source

On Monday, the German Ifo Business Climate fell to 102.0 in November, its third straight drop. There are now concerns that the downturn could continue in the fourth quarter and there are raising concerns that the German expansion is in jeopardy of being over.

Car manufacturers Daimler, Volkswagen and BMW, make up roughly 11% of the DAX index. If President Trump moves forward with his impose auto tariffs at a rate of 25% on the EU, the demise of German’s economy will only accelerate.

When you couple the economic reports in Germany with US company earnings decelerating in 2019, the tops have been put in on the DAX. Let go to the charts for the details.

On the monthly chart, price has already breached the monthly demand at 12000. This was a key psychological level that held the Sellers off in March, but didn't hold off the Sellers in October.

On the weekly chart, we see a nice head and shoulder pattern in which price broke the neckline the week of 10/8.

Going back to the monthly chart, my thesis will be further supported when price breaks the monthly uptrend line.

That level also is another psychological level, the whole round number of 11000.

The next immediately level I'm looking at is the monthly demand at 10300.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.