My DJIA post marked a (short term) top for US equities. It happens. As said the other day, it’s a low probability call. However things change fast and if you read my post carefully you’ll notice I also entertained a possibility that German DAX could be forming a major market top and added that if the price of DJIA gets below 26,400 we want to be defensive.
And man, being defensive was the right call. Or short of course one could say. Stock indices were crushed yesterday with Nasdaq 100 down almost 4%. Other indices were no exception to this selloff. So, my main question is, is this the start of a something bigger?
DAX was a serious under performer compared to the US stock indices lately and because it’s one of the most important markets in the worlds we have to consider that if DAX is going down, US indices could follow too.
If DAX stays below 11,900 than we have to be open to this scenario. In this case we should not be surprised to see another 12% from here, which would be a 25% correction peak to trough.