13/10/21 13:15:00

Market sentiment: "Lovely invitation"

Failure to buy stocks, profit-taking by the bears and passive retail investors indicate great skepticism, despite rising sentiment.

Joachim Goldberg would have been unsurprised by "buying in the weakness," but investors seem to have lacked the guts to get involved in local blue chips. 3 percent of professionals went long, and of retail investors, 1 percent even sold. Nevertheless, 11 percent of the institutional investors have closed their short exposure, profit-taking suspects the behavioral economist. 

Behind the passive attitude Goldberg sees however no genuine skepticism, but the need to be with the positions in the minus and not to want to realize this. The sentiment indicators are with +2 and +12 again closer together and relatively considered, so Goldberg, in the slightly optimistic range, which he does not consider threatening yet. However, investors on the sidelines are likely to go short again from 15,400/15,450. Downward, it is doubtful whether the support at 14,817 points could hold again.

13 October 2021. FRANKFURT (Börse Frankfurt). When it comes to terms like "high" or "low", market participants very much like to orient themselves to extreme points from the past because they (supposedly) want to buy or sell cheaply there. This may also have been the case recently with the DAX, which marked its lowest price during the reporting period at around 14,819 points shortly after our last sentiment survey. Whether by coincidence or not, the lowest DAX level of the second quarter of this year was marked at around 14,817 points, so that with this reference point, stock exchange traders virtually received an invitation to buy into weakness that could not have been more tempting. 

Admittedly, this occurred in a rather unfavorable news environment characterized by tapering expectations by the U.S. Federal Reserve, feared global energy shortages, uncertainties in China and increasing inflation fears. In other words: Those who dared to buy into weakness had to muster some mental courage. And were rewarded - in hindsight - with a DAX gain of 3 percent at times so far.

Not really bitten

Now, at least some of the institutional investors we surveyed seem to have accepted the aforementioned "invitation" to buy into weakness. Because our Börse Frankfurt Sentiment Index has risen by 14 points compared to the previous week to a new level of +2. At first glance, a handsome gain, but many players - despite the presumably veritable gains from bearish engagements - apparently lacked the courage to clearly engage on the bullish side. At least, almost three quarters of all former pessimists merely contented themselves with profit taking and ensured that the group of neutral players was noticeably replenished. 

Meanwhile, there was little change (understandably) among private investors, whose Börse Frankfurt Sentiment Index was unchanged from the previous week at +12 - only the polarization between bulls and bears was reduced somewhat. In fact, it looks as if private investors have not really reduced their bullish engagements of the past 14 days. This is not because people in this panel view economic conditions differently than their institutional counterparts. Rather, we suspect that the cost prices of these engagements are at higher levels and have not been reached so far. After all, the positions that were underwater in some places do not seem to have been topped up.

Some could not, others did not want to buy properly

With today's survey, the difference in sentiment between private and institutional investors has narrowed again. While the majority of the former probably remained trapped in their bullish positions, at least some of the institutional investors were able to take decent profits - possibly even close to the May lows. However, most players resisted the above-mentioned "invitation" to the extent that formerly bearish exposures were not immediately turned 180 degrees into bullish positions to a large extent. This is understandable given the economic environment.

Although a slight optimism among investors is apparent in the relative view of three and six months, this does not appear to be a threat to the DAX. However, it also remains questionable whether the trees will grow to the sky on the other side. Because from a fundamentally negative basic mood, the successful bears from last week may possibly become active again as sellers at higher levels (15,400/15,450). On the other hand, the widely recognizable reference point of 14,817 points mentioned at the beginning is still considered an important level that would most likely not survive a second attack. 

13 October 2021, © Goldberg & Goldberg for boerse-frankfurt.de

Sentiment Index of Institutional Investors


compared to last survey



DAX (change from previous survey): 15,200 (+280 pts.)
Börse Frankfurt Sentiment Index Institutional Investors: +2 points (previous survey: -12 points)

Sentiment Index of Private Investors

compared to last survey



DAX (change from previous survey): 15,200 (+280 pts.)
Börse Frankfurt Sentiment Index Private Investors: +12 points (previous survey: +12 points)