DAX Intermediate Crest
Sell: DAX Index Ftrs (GXM5) @4416

Markets crest when the fundamental backdrop is perceived to be solid. This is clearly the case in Germany. Dividend growth is strong, private equity flows into the region are at historic levels, and valuations are relatively ‘cheap’ versus the S&P500. Western European bourses are benefiting from a global flight from America since Bush’s re-election. Investment inflows from Oil-producing nations have also acted as a tailwind.

Since the Jan lows, the DAX has traced-out a symmetrical 3peak structure. While doing so, breadth has deteriorated. A powerful LLH static cycle hit this past Friday (APR 8). Both Ls of this count emanate from the shoulders of a powerful inverse H&S pattern which propelled the DAX to these levels (Head=AUG 2004). Complementing this LLH count is a TOP-TOP count with point of origin on JAN 24 2005 low. Demark Sequential Setup=12; Demark Px projection=4408 (Friday’s intraday high=4413). Daily 5waves can be seen since the 3/22 lows; Orthodox top remains 3/7. A high is within +/- 1 day of occurring. A close below 4275.55 will seal the top formation.
Risk to above analysis: Close >4436 (79 bps).