The DAX continues to rise, the professionals hardly react, only among private investors hope consolidates. Goldberg suspects that this is because many risks have been ignored.
Skepticism is crumbling, at least among market commentators and medium-term private investors. Of the professionals we surveyed, 3 percent are out of stocks and 2 percent have gone short. Joachim Goldberg suspects profit-taking and counter-positioning. The sentiment index of this investor group falls to +4 points. The situation is different for private investors, 4 percent of whom have switched into equities and out of the short position. The behavioral economist suspects increasing belief in a trend change here.
He considers the small movement of many institutional investors in view of the strong recovery as amazing. On the whole, the situation is not threatening, even if the geopolitical risks are ignored and the reports on the development of interest rates are viewed positively.
2 November 2022. FRANKFURT (Börse Frankfurt). Stock market players are currently not to be envied in two respects. On the one hand, the outcome of the two-day meeting of the Federal Open Market Committee of the U.S. Federal Reserve is due this evening after European time, a few hours after our latest sentiment survey. And there are likely to be more than a few players who will be paying attention to every word, every undertone of Fed Chairman Jerome Powell in the ensuing press conference. After the central banks of Australia and Canada, for example, have raised interest rates more moderately than expected, it will be important to communicate whether the U.S. central bank will announce that it will slow down the pace of the next upward interest rate steps somewhat after today's 75 basis point increase, which seems almost certain.
On the other hand, after the impressive DAX upward movement of at times more than 13 percent since the beginning of October, some analysts no longer seem quite sure whether this is still just a rally in the bear market or whether the downward trend of the DAX has actually been broken on a sustained basis.
Private investors increasingly betting on upward trend
Meanwhile, sentiment among the institutional investors we surveyed with a medium-term trading horizon has deteriorated somewhat. This is because our Börse Frankfurt Sentiment Index fell by 5 points to a new level of +4. Not least because some optimists have taken their profits in view of the third DAX rise in a row. The majority of them switched directly to the bear side and thus turned their own position by 180 degrees. Nevertheless, it remains remarkable that the activity in this panel has remained surprisingly low during the past five weeks.
The development among private investors points in exactly the opposite direction. There, sentiment has improved significantly, as the Börse Frankfurt Sentiment Index has risen by 8 points in this panel to a new level of +12. On balance, some bears - 4 percent of all respondents - seem to have thrown in the towel. At the same time, the group of optimists has grown by a similar amount and is even at its highest level since February 16 of this year.
Hidden risks
With today's survey, a sentiment gap has emerged between private and institutional investors. The difference in the sentiment indices of both panels of +8 in favor of private investors may look quite harmless on the surface. In fact, however, it should be noted that the latter were still less optimistic than their institutional counterparts in the previous week. Apparently, especially among private investors, the view seems to have prevailed that the DAX still has room to move upwards, i.e. that an end to the downward trend could be indicated. And this despite the fact that the DAX has already gained almost 10 percent in value during the past three weeks alone.
But the mood among institutional investors is not bad either, especially when viewed over the past three months. At least the upcoming event risks, the above-mentioned Fed meeting, but also the upcoming mid-term elections for the U.S. Congress next Tuesday, have not led to major position shifts. It also appears that geopolitical risks have almost completely faded out for many players. However, the slight optimism of both panels still does not pose a threat to the DAX - the mood of domestic investors is currently also likely to reflect the development of long-term capital flows.
2 November 2022, © Goldberg & Goldberg for boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 41% | 37% | 22% |
compared to last survery | -3% | +2% | +1% |
DAX (change to last survery): 13.350 (+250 points)
Börse Frankfurt Sentiment index institutionelle investors: +4 points (last survery: +9 points)
Bullish | Bearish | Neutral | |
Total | 46% | 34% | 20% |
compared to last survery | +4% | -4% | +0% |
DAX (change to last survery): 13.350 (+250 points)
Börse Frankfurt Sentiment index private investors +12 points (last survery: +9 points)
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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