Intraday Market Thoughts

30-quarter cycle in DAX-30 strikes again

by Ashraf Laidi
Jun 8, 2015 19:35

Germany's DAX-30 index could no longer keep up appearances, as the formation of lower-highs became evident to the least suspecting of technical analysts. Hitting 4-month lows today, the index has fallen11% from its April highs, but remains +13% YTD in euro terms and +5% in USD terms. 

The 30-quarter cycle joining major peaks in the Dax highlight the dangers of prolonged downside ahead as higher yields risk becoming a secular trend and the euro is further supported by rising Eurozone inflation and a hesitant Fed.

The deepening inverse relationship between the Dax and EURUSD and the positive relation with German bund yields highlights the improvement in German and Eurozone figures, particularly the increasing reality that Eurozone inflation will break above 1.0% before end of Q3, well beyond the ECB's 0.3% forecast for 2015. My calls for 1.10% in 10-year bund yields and $1.1550 for EURUSD in recent weeks support decision to issue a long EURUSD at 1.1110 on Friday after the NFP, available for Premium Insights members to view alongside the 3 charts.

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30-quarter cycle in DAX-30 strikes again - Dax June 8 2015 (Chart 1)


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