DAX pulled back quite hard last week. Not even close to a panic sell event but it managed to put an ugly candlestick on the weekly chart. Also the monthly chart is ugly at the moment but that is a different story..
The market breadth ( = the performance of the underlying stocks in the DAX index) is bearish but it is getting close to that “over sold level”. That is, we could be quite close to a rebound. Although we get a rebound, it is however quite likely, that we have to continue lower to find a better mid term bottom, if we compare current market breadth to other similar events since 2015 to date. Earlier the mid term bottom has been put in after we have got a positive divergence between DAX and the market breadth oscillator.
Note also that there are quite a few events where the market breadth passed the -225 level. About a year ago, it almost touched the -450 level before we got a huge rebound!
The US election is likely the biggest event incoming week and it might provide even more volatile markets. However, from a technical analysis point of view, this might be a good buy-the-dip event.
Note also, that SPY is close to 200 daily moving average (DMA200). Usually there are many long stop orders close to that level and if DMA200 is broken, it might send SPY south another -5% quite easily. If so, DAX will obviously follow..
Trade at your own risk and remember to use stop/loss orders!