In the meantime, all sorts of things are putting pressure on share prices, to which medium-term investors are reacting by switching from long to short. This slightly improves the outlook for rising prices.
According to today's survey, quite a few of the local investors have turned from bullish to bearish. 11 percent of professionals have exited equities and 9 percent have switched to the short side. From Joachim Goldberg's point of view, they have used the interim highs to liquidate their positions at least neutrally, if not at a profit. Given rising bond yields, poor economic data and the geopolitical crisis, this is not surprising to the behavioral economist. Privates have moved in the same direction, but to a lesser extent. The sentiment indices stand at +5 and +18 points.
Goldberg's conclusion: the lower optimism of the institutional investors improves the starting position for rising prices. With one caveat: in relative terms, there is still some disruptive optimism in the market for a move higher. On the downside, however, the situation had improved: from 15,000 points, profit-taking could put the brakes on a downward movement.
18 October 2023. FRANKFURT (Goldberg & Goldberg). The fact that the DAX, after initially gaining further ground since our last sentiment survey, then lost up to 3 percent in value at times should not come as a surprise in view of geopolitical events - at least at first glance. But it is probably not the terrible news from the Middle East that is having a major impact on stock market activity in this country. Rather, the development of the DAX seems to be primarily dependent on that of bond yields both in the U.S. and here in Germany, if one takes a look at the most recent corresponding price developments. At the beginning of our reporting period, for example, the stock market barometer actually benefited from the initial fall in bond yields, but ultimately came under significant pressure as they subsequently rose during the past few trading days.
However, the institutional investors with a medium-term trading horizon surveyed by us may also have contributed to this. Our Börse Frankfurt Sentiment Index fell sharply by 20 points compared with the previous week and now stands at +5. There were certainly a number of reasons for this not entirely unexpected selling - one important reason was probably "profit-taking".
Comfortable starting position
But also the fact that certainly many optimists have reached their old cost prices again without profit, but at least without loss, has contributed to this change of mood. It is remarkable that more than 80 percent of the former bulls have moved directly to the bears, i.e. have turned their positions by 180°. Presumably at a much higher DAX level than today.
There was also a deterioration in sentiment among private investors - albeit to a much lesser extent: the Börse Frankfurt Sentiment Index in this panel fell by 5 points to a new level of +18. A small group of particularly active traders, who also switched directly from bullish to bearish, appears to be responsible for this mini-reversal; however, this group accounts for only 2 percent of all respondents.
Much speaks in favor of changing sides
Today's survey makes it clear that one part of institutional investors in particular can boast that they have done everything right. While the appetite for short positions was still comparatively modest in the previous week, most macroeconomic and also geopolitical reasons for bearish commitments now that performance has finally returned.
However, the gap in sentiment between institutional and private investors has now widened again significantly, with the latter noticing above all that even the initial rise in the DAX last week apparently did not lead to position smoothing among the optimists among them (because of the poor cost prices?).
On balance, the reduced optimism among institutional investors contributed to an improved starting position for the DAX. However, a small drop of bitterness remains. Although the Börse Frankfurt Sentiment Index is not too far away from neutral territory with today's survey, the remaining optimism is still quite visible in the relative view on three and six months, although it can by no means be described as exuberant. After all, the demand situation has improved due to any profit-taking from the recent bearish engagements on the downside (presumably just below 15,000 points), so that even in the event of further selling - especially from abroad - the door is no longer quite so wide open on the downside.
18 October 2023, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 43% | 38% | 19% |
To previous week | -11% | +9% | +2% |
DAX (change to previous week): 15.250 (-150to previous week)
Börse Frankfurt Sentiment Index of institutional investors: 5 points (-20 to previous week)
Bullish | Bearish | Neutral | |
Total | 50% | 32% | 18% |
To previous week | -2% | +3% | -1% |
DAX (change to previous week): 15.250 (-150 to previous week)
Börse Frankfurt Sentiment Index private investors: +18 points (-5 to previous week)
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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