Despite a significant dip of 3.5 percent in the course of the week, German blue chips are at record levels. Even if the specter of inflation seems to have been dispelled, the danger of a bubble remains. In any case the medium-term investors we surveyed reacted by buying. At least the professionals, 12 percent of whom have bought stocks and 4 percent of whom have closed their short positions. The sentiment index of this group of investors stands quite high at +26 points. Private investors have moved somewhat less and are slightly less bullish at +17.
However, Joachim Goldberg does not see any dangerous euphoria when he puts the values into perspective with a six-month comparison. Nevertheless, the starting position for the DAX has deteriorated somewhat. On the one hand, the potential demand as a support to the downside has become significantly smaller. On the other hand, according to the behavioral economist, there is a threat of profit-taking between 14,250 and 14,300 points which could put the brakes on price gains.
3 March 2021. FRANKFURT (Börse Frankfurt). One topic in particular has kept stock market participants on their toes since our last sentiment survey. In the second half of last week in particular, there was concern about the possible consequences of the rise in yields on US government bonds. For example, ten-year bonds temporarily yielded more than 1.6 percent. It was probably not so much the absolute level but primarily the speed of the rise - even for German government bonds with comparable maturities - that caused worry lines to appear on investors' foreheads. At least for a short time. Thus, the DAX had to accept another temporary setback to the zone between 13,650 and 13,700 points that we had targeted, but then recovered quite impressively. Starting from the previous week's low, we not only registered a recovery of around 3.5%, but even a new all-time high shortly after the close of the survey.
The fact that the players have apparently recovered from their yield fears since Monday is not only due to the progress made on the U.S. economic stimulus program which has repeatedly been cited as a justification for significant price increases on the stock markets for weeks. A familiar theme has also recently come to the fore again: Are the U.S. stock markets in particular in the midst of a speculative bubble? Even if the answer to this question is disputed or unresolved among commentators, the mere discussion of this topic seems to bring something positive with it: There is at least an awareness in many quarters that such a risk - including a bursting of the bubble - could exist. This is a risk that is often ignored in the unrestrained euphoria.
Another warning about the bubble
Meanwhile, the institutional investors with a medium-term outlook surveyed by us are in quite fearless shape, at least on the surface, and their sentiment has improved for the third time in a row and once again significantly in today's survey. This is because our Börse Frankfurt Sentiment Index has risen by 16 points to a new level of +26. In the best case, a part of the new optimists, which are composed of one-third of former bears and two-thirds of previously neutral players, used the DAX setback from the previous week to enter the market. The overall number of bulls is now about twice as high as that of the bears.
Private investors, however, were much more cautious, with the Börse Frankfurt Sentiment Index rising by just 4 points to +17. Remarkable is that on balance the group of optimists has not increased. The improvement in sentiment is almost exclusively attributable to the covering of previously bearish players in this panel.
Not euphoric
Today's sentiment survey makes two things clear. On the one hand, optimism among institutional investors is more pronounced than among their private counterparts which is similar to four weeks ago (index level at that time: +32). Nevertheless, both groups are now showing the second-highest level of optimism this year. On the other hand, despite this optimism, the DAX is still quite far from a euphoric stage or even a bubble formation. This is shown above all by the relative expression of the Börse Frankfurt Sentiment Index, which in a 6-month comparison, but also since the beginning of the year, is nowhere near as high as the absolute values would suggest.
On balance, the starting position for the DAX has thus deteriorated somewhat compared with the previous week. On the one hand, because the potential demand in the event of another setback is likely to have decreased significantly. On the other hand, profit-taking by optimists from the two previous weeks threatens to put at least temporary obstacles in the way of the DAX in the area between 14,250 and 14,300 points in the event of a possible rise.
3 March 2021, © Goldberg & Goldberg for boerse-frankfurt.de
Time | Title |
---|