29/06/22 13:40:00

Market sentiment: "Deceptive neutrality"

Although both professional and private investors are at zero, Goldberg still thinks sentiment is too good.

On the zero line between optimism and pessimism, the mood of both private and professional investors has fallen. But not to the point, as Joachim Goldberg finds. A small group of bulls has divested itself of its short positions. The medium-term oriented investors are in a quandary: the positions of the optimists are still far underwater, as the behavioural economist suspects, so that the price gains so far have not been sufficient. And for the pessimists, the few point losses in the course were not profit enough. 

The bottom line is that Goldberg sees the market continuing in an overriding downtrend. He doubts that the bears will find enough demand for losses, but rather fears emergency braking by the bulls. On the upside, there is still room for 5 to 6 per cent before one could expect a trend change.

29 June 2022. FRANKFURT (Börse Frankfurt). At the end of the quarter, one could almost look a little enviously to China, where shares (measured by the Shanghai Composite 300 Index) have strengthened by around 19 percent from their lowest level at the end of April to today. According to the usual definition, this means that we are on the verge of a bull market. The fact that Chinese stocks have outperformed their Western counterparts in the US and here at home is partly due to differences in monetary policy. In contrast to China, stock market players in this country are struggling with a massive inflation trend and fears of a possibly too tight central bank policy (especially in the USA). In short, the DAX has lost a little more than 9 percent of its value shortly before the end of the past quarter at the time of our sentiment survey today and is not too far from its low for the year. US equities, by the way, have taken a much bigger hit.

At least the DAX has temporarily recovered a little since our last sentiment survey and temporarily posted a gain of around 2.9 per cent. Apparently enough to induce some of the institutional investors we surveyed to change their positions. Because our Börse Frankfurt Sentiment Index fell by 7 points compared to the previous week, resulting in a new level of +/- 0. This neutral index level is primarily due to a small number of previously bullish investors who have turned their positions 180° to bearish. 

Temporary DAX recovery benefits only a few

We can observe a similar development for private investors, whose Börse Frankfurt Sentiment Index fell by 4 points to a new level of +/- 0 as well. Here, too, we assume that a small group of optimists has parted with their investments.

Thus, the sentiment of private and institutional investors is on the neutral zero line, as it were, but not at zero. For although our Börse Frankfurt Sentiment Index for institutional investors shows a neutral value, it remains remarkable that the majority of the optimistic investors there have remained inactive despite the interim DAX recovery. On the other hand, it is understandable that the majority of them probably hoped for a stronger rally. Not least because the cost prices of their investments are in many cases still far too far from the current DAX level.

Sentiment too good

On the other hand, since our last survey, the pessimists, who now make up 36 percent of all investors surveyed, have seen the DAX fall by less than 100 points - apparently not enough to cover any short positions.

The bottom line is that today's decline in the Börse Frankfurt Sentiment Index has hardly brought any relief for the DAX. For in the event of a further downturn, it seems questionable whether the current pessimists would be able to muster enough demand to halt a significant decline in the DAX in the long term. Not to mention the optimists, who might have to pull the emergency brake on the other side in such a case in order to get rid of their bullish engagements.

If, on the other hand, there is another recovery rally - we are still talking about a "normal" correction in an overriding bear market - there would still be room on the upside for a five to six percent upward movement, based on today's elevation price of 13,100 DAX points. Measured against the DAX development of the past weeks, the neutral mood of investors is too good overall.

29 June 2022, © Goldberg & Goldberg für boerse-frankfurt.de

Sentiment index institutional investors


compared to last survey



DAX (Change to last survey): 13.100 (+100 points)
Börse Frankfurt Sentiment index institutional investors: +0 points (Status last survey: +7 points) 

Sentiment index private investors


compared to last survey



DAX (Change to last survey): 13.100 (+100 points)
Börse Frankfurt Sentiment index private investors: +0 points (Status last survey: +4 points)

About the Börse Frankfurt Sentiment Index

The Börse Frankfurt Sentiment Index ranges between -100 (total pessimism) and +100 (total optimism), the transition from positive to negative values marks the neutral line.

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