13/07/22 14:51:17

Market sentiment: "Tied bulls"

Quick news and slight price gains - the medium-term oriented investors react rather sluggishly. Because many would continue to sit deep in the red, believes Joachim Goldberg. 

The DAX has risen slightly since last Wednesday, and the medium-term investors we surveyed have not moved far from their old positions either. 3 percent of the professionals have moved out of the long exposure and 5 percent of the private investors out of the short positions. The majority of them are now sitting on the sidelines. The sentiment indices are back together with +8 and -9 points, yet still on the other side of the neutral zero line.

Joachim Goldberg suspects that the recovery of the DAX in the week under review was not enough for the professionals to take profits, because they are still clearly in the red. These bullish positions represented a burden for the DAX on the downside, because then the emergency brake should be pulled in several cases. On the upside, however, he does not expect any profit-taking until 13,250/13,300 points.

13 July 2022. FRANKFURT (Börse Frankfurt). Measured against the recurring economic pessimism, the DAX has performed quite well since our last sentiment survey. We even note a weekly increase of 1.2 per cent, with the stock market barometer briefly peeking above the 13,000 mark. The comparatively robust DAX is remarkable insofar as some dramatic events took place in other markets. So-called "safe havens" such as government bonds have been in demand recently. Economic pessimism was also reflected in crude oil prices, which again suffered heavy losses yesterday. The crash of the euro was also perceived as striking. Not because there had already been similarly large price declines within a few weeks this year. But because the common currency had fallen back to parity against the US dollar for the first time since the end of 2002. An exchange rate of 1.0000, a so-called "round number", is always perceived by the players as something special and significant. Many commentators saw this as a signal that one should be more concerned about the Eurozone.

DAX has not risen far enough

The majority of the institutional investors with a medium-term trading horizon surveyed by us do not seem to be worried about the local stock market. For the Börse Frankfurt Sentiment Index fell by just 4 points compared to the previous week to a new level of +8. Not least because a manageable number of previously optimistic players have abandoned their bullish commitments, presumably from the previous week. For most optimists, however, the temporary price gain of the DAX in the order of around 3.3 per cent was apparently not enough to cause profit-taking or to tempt them to exit.

However, we observed an opposite tendency among private investors: Our Börse Frankfurt Sentiment Index in this panel rose by 6 points to a new level of -9. However, not because we were able to identify a larger number of optimists, but because previously pessimistic players (approx. 5 per cent of all respondents) decided to close out their investments and predominantly join the neutral players on the sidelines.

Forced to be optimistic

With today's survey, the large gap between private and institutional investors from the previous week has narrowed somewhat. The clear divergence between negative market comments on the one hand and the bullish positioning of the majority of institutional investors on the other remains remarkable. This is all the more so when one considers that the ZEW index published yesterday - often also a reflection of the positioning of institutional investors - turned out miserable for Germany.

As in previous weeks, one thing can be assumed as the central motive for the bullish players: Their optimism stems from the fact that the cost prices of their exposures in aggregate are probably still far above the current price level. These bullish positions naturally represent a burden for the DAX if there is a new wave of selling with new lows for the year. Because then the emergency brake will probably be pulled in many cases. At least the overall situation for the DAX has improved slightly with today's survey insofar as recoveries in the downward trend of the DAX to 13,250/13,300 points would presumably not be disturbed by larger position smoothings of optimistic players.

13 July 2022, © Goldberg & Goldberg for boerse-frankfurt.de

Sentiment index institutional investors


Compared to last survey



DAX (Change to last survey): 12.750 (+150 points)
Börse Frankfurt Sentiment institutional investors: +8 points (Status last survey: +12 points) 

Sentiment index private investors


Compared to last survey



DAX (Change to last survey): 12.750 (+150 points)
Börse Frankfurt Sentiment index private investors: -9 points (Status last survey: -15 points)

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