German DAX: 05/30/2017


The Elliott wave structure on the DAX index seems very interesting. The most important thing to note is the fact that we are currently in the fifth wave off of the post triangle thrust that occurred off of the 2011 low. We are very close to the terminus of the entire move that started in the 1960s and a significant correction/deterioration targeting the 2011 low is highly likely in the upcoming environment. The structure of intermediate wave 5 is slightly odd hence more confirmatory price action is necessary before prematurely calling a top. It is important to note that based on the structure in the Dow Jones Industrial average we have reason to believe that the move that started in the 1960s is in itself a larger fifth wave of a major move to the upside. Another reason to believe that it is a fifth wave is the divergence in economic growth between the third wave in Germany (1940s and 1950s) and the fifth wave that started in the late 1960s. Such divergence is typical in fifth wave advances and hence confirms our outlook of a major fifth wave from the late 1960s. So this would mean that we are in the fifth of the fifth of the fifth at the time of writing. This suggests that longs should not only be avoided but speculators should begin to flee this market as fast as they possibly can considering the massive downside risks that this markets comes with.


From a cyclical perspective we are currently in the terminal 18 year cycle of the current Kondratieff wave. This suggests that we are on the verge of a Kondratieff cycle correction at the time of writing since this market is translating to the right considering the new all time highs relative to that of the trend cycle (1995-2011). Once this terminal cycle’s correction begins we can expect a swift and disruptive decline to bring this market back to the 2011 low in no time. The projection line suggests that the peak in this market has been realized however I would certainly look for confirmatory price action to validate such a conclusion. A break of a simple up trendline would be significant confirmation that the bottom will fall out of this market. In terms of the German DAX, my advise is to casually step aside and watch the sellers and shorts break this markets knee and bring it straight down to its face.


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