DAX Break-Out Signals Rally, Acampora Says: Technical Analysis

Global stocks may rebound through September following gains so far this month by Germany’s DAX Index, according to Ralph Acampora, who’s used charts to predict market moves since the 1960s.

The German benchmark index this month breached a resistance level near 6,340, Acampora said in an interview. When the DAX advanced in April and June, it failed to pass this level. Each time the DAX declined between May and July, it fell to a higher low as buyers piled back in, forming a “classic ascending triangle,” the analyst said.

“The risk trade is back,” Acampora, a director at Alverita LLC who co-founded the Market Technicians Association in 1970, said yesterday from Amsterdam. “What news are we going to hear that is so terrible that we have not heard already? If I am right and this market is led by things like Germany, we’ll get another leg up.”

The DAX dropped 1.7 percent to 6,182.41 at 1:38 p.m. in Frankfurt after the Federal Reserve said growth in the U.S. economy is likely to be “more modest” than it had forecast. Even so, the index has gained 8 percent since a near-three month low on May 25, as concern eased that the slowdown in global growth and the threat of a sovereign-debt crisis would hamper earnings.

New York-based Acampora came out of retirement last year to manage funds sold to European investors by Geneva-based Altaira Wealth Management. His four-decade Wall Street career included stints as director of technical research at Kidder Peabody & Co. and Prudential Securities.

The manager said yesterday he added to his equities holdings in the past week after staying out of the market in May and June.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Support levels act as floors limiting further declines, while resistances limit gains.

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