This will be a short market update, where charts should speak for itself. If anything is unclear, drop me a line at Twitter or Stocktwits.

$VIX as an overlay on SPY monthly chart. When $VIX is touching the “magical” 11 – 10 -level, next month is often a) a smallish red or b) very limited upside (i.e. tighter trading range). This is not fool proof, look at the exception ~2006/2007. That is, a ~2-3% correction is to be expected within the next ~30 trading days. The probability is high for seeing higher highs within the next 2-4 months.

DAX ended higher last week (+1,03%) and by looking at the underlying, the breadth (health) seems OK with 17 stocks advancing and 13 declining.

The underlying stocks in DAX is from a technical indicator summary in a “buy mode”. Only the shorter time frame (next week) is beginning to show some weakness, with almost 10 stocks in “strong sell” -mode.

Historically, DAX has been more volatile on the second trading week of the year when compared to the first trading week. Especially more volatility to be expected towards the end of the week.

A graphical illustrations how different weekdays have behaved volatility wise during the last ~20 years.

DAX seasonality for the second trading week has historically been a bit more bearish than bullish, with an average performance of -0,67%.

 


DAX monthly seasonality for January has on the other hand been historically more bullish than bearish, with an average gain of +0,24%

A graphical illustration of week 2 – week 6 performance per year.