On this chart what appears is that when DAX is in a steady rally, its top to top line tends to climb at 21% per year.
This regime being very fast and the average over the long run should be in the 7/10%, it comes to no surprise that DAX has large corrections every 5/10years.
Sometimes it deviate from that 21% speed line for long enough that when it catches up, it creates huge rallies (like it did in January 97 (post 94 correction).
We are exactly at this junction. DAX has corrected significantly in 2011 and has since followed a parallel 20% (42degres angle) speed line... IF THERE IS AN INFLEXION POINT HERE, you would get a scenario a la 97 with a catch up to 19,000 over a year.
In NORMAL Circumstances, the current area is an important resistance that is likely to create headwind at least for a few months.
I still could not find anything interesting about the DAX PE at this levels... There could still be value if it has to be priced at the same level than SP500.
