Warning signal from the ifo economic indicator.
(Reading time: 3 - 5 minutes)
The Munich-based ifo Institute's business climate index fell surprisingly sharply in May. The slump in business expectations in industry, which play a decisive role in the private-wealth stock market indicator, was particularly sharp. This index fell from minus 2.3 points in April to minus 13.6 points now (chart above).
For us, business expectations in industry are so important because they are not only an indicator for the German economy but also for the DAX. In the past, a decline in the index three times after a sustained rise often indicated a downward trend reversal.
At first glance, therefore, the May result is not that dramatic. After all, it is only the first decline after a continuous six-month rise. For a classic sell signal...