German DAX Index Futures traded on Eurex crossed above a 13-week high on Wednesday only to turn around and lose a 'big' 1.8% on Thursday to close at 7941.5. This is a rare event for the index to lose a 'big' percentage one day after setting a new 13-week high, but the results are extremely consistent especially in the range of 30-50 days later.
Q: How has the DAX responded to a 'big' 'trend day' decline after crossing above its 13-week highest high?
A: According to the eight previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge indicates that the DAX has shown a very strong bullish edge that peaks 49 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Thursday, Dec. 13, 2007) is Tuesday, Feb. 26, 2008.
The DAX rallies in 100% of the cases (8 of 8) by an average of 7.1% relative to the close on the event date. The overall return of the 8 cases is 7.1%, which, based on the close of the DAX on the event date (7941.5), provides a target price of 8505.3.
If you would like to see more details of this historical edge, go to www.markethistory.com Mickey Schoenhals is an analyst with Markethistory.com.
