Sunday, August 15, 2010

German Bourse Looks Much Better than US Counterparts

Amid an incredible amount of "doom and gloom" (most recently the Hindenburg Omen), I went looking for a constructive (if not downright cheerful) chart. I'm a contrarian in nature, and when just about everyone (not just people like Gerald Celente and Peter Schiff) is doomy and gloomy, it's either everyone is right for once or everyone is wrong again.

Anyway, I found a constructive chart, and it is German DAX Composite.

The 3-year DAX weekly chart shows the index is still above the 40-MA, unlike the US indices which struggled to fully regain that line and ended the week below. The correction that started in late April looks more like a consolidation, forming an ascending triangle pattern above the 40-MA. If the ascending triangle pattern plays out, the target would be 7027. That's about the target of the point and figure chart also. The index ended the week at 6110.

Germany's economy grew by 2.2% in the second quarter, the fastest in 20 years since the reunification. It grew by making things that people around the world want to buy, even at a premium. It grew DESPITE the government stimulus, which many in Germany acknowledge was misspent and probably unnecessary.

A stark contrast to the US.

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