close icon

DAX 30: Time to Be Careful Now

“DAX 30: Stage is Set for a New All-Time High” was published on October 3rd, 2016. While the German benchmark index was trading close to 10 530, Elliott Wave analysis of its monthly chart made us believe the bulls are going to succeed at lifting it above 12 400 in the months ahead. That was over a month before the so-called “Trump rally”, which proves that Ralph Nelson Elliott was right when he said that “the habit of the market is to anticipate, not to follow.

dax elliott wave chart
That is how the German DAX 30 looked like eight months ago. The logic behind the bullish outlook was simple: trends tend to develop in the form of a five-wave pattern, called an impulse. Since the fifth wave – V – of the post-March 2009 uptrend was missing, we assumed the bulls were not done just yet. In 99 out of 100 times, the fifth wave would exceed the extreme of the third wave of the same pattern. Therefore, the DAX 30 was supposed to rise to a new all-time high.

dax 30 elliott wave analysis

On May 16th, 2017, it climbed to as high as 12 841, which is exactly 444 points higher than the top of wave III. Well done, now what? According to the theory, every impulse is followed by a correction of three waves in the opposite direction, which normally retraces back to the termination area of the fourth wave. This means that once wave V ends somewhere between 13 000 and 14 000, the bears should return to cause a 30%-35% pullback in the German blue chip index. From a technical standpoint, it is too late to buy and too early to short, so staying aside appears to be the best thing to do.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

DAX 30 Surged 50%+ in Three Months. Here is Why

THIS WEEK ONLY, in addition to the seven premium instruments, all our subscribers will receive ONE Elliott Wave analysis of DAX 30 as a BONUS. Subscribe NOW and get yours on Sunday, June 14th. The last time we wrote about the German DAX 30, the index was in a free fall. It was March 2nd…

Read More »

Elliott Wave Setup Sends S&P 500 12% Higher

As demonstrated in our previous article about the S&P 500, the stock market started climbing while the economy looked the weakest. Then, as the markets kept rising, a new conundrum occurred. How to explain the extremely wide disconnect between the stock market and the economy? GDP forecasts for Q2 are all over the map, ranging…

Read More »

Insurance ETF Nearly Halves As COVID-19 Takes Toll

Maybe only with the exception of grocery stores, one can hardly find a stock not suffering from the COVID-19 disaster. Insurance companies were not spared either, so it is no surprise that the SPDR Insurance ETF (KIE) crashed, as well. This ETF, which ranks Progressive and Brown & Brown among its top holdings, lost 46.1%…

Read More »

Another Nightmarish Week, Another Illogical S&P Surge

As COVID-19 spreads across the U.S., the economy is teetering on the verge of collapse. Initial jobless claims came in at 6.6 million yesterday, bringing the three-week tally to nearly 17 million. The unemployment rate is estimated to have already surpassed its 2008-2009 recession level. Economists at Goldman Sachs, Morgan Stanley and the IMF predict…

Read More »

S&P 500 Elliott Wave Analysis Giveaway

The S&P 500 crashed by as much as 35% in just one month. And while the coronavirus outbreak was totally unpredictable, the crash it caused made perfect sense. Elliott Wave is our favorite method of analysis, but as the market kept rising we decided to back it up with fundamental data. The result was a…

Read More »

S&P 500, Against All Logic, Re-Enters Bull Market

The coronavirus pandemic forced the global economy to grind to a halt. Major U.S. stock market indices made their fastest plunge into bear market in history. In less than two months, DJIA and the S&P 500 lost 38.4% and 35.4%, respectively. “The virus is just starting to spread in the United States, the market is…

Read More »

Dow Jones Transports Ready for a Rebound?

The coronavirus pandemic is wreaking havoc on the global economy. Governments are closing malls, restaurants and literally all kinds of social gathering places, and even putting entire cities on lockdown. In the meantime, stock market indices are in free fall. The S&P 500 is down 28.7% YTD and the Dow Jones Industrials lost 35.2% since…

Read More »

More analyses