Many professionals are reacting to the good DAX performance by switching to the short side. In Goldberg's opinion, however, this makes the sentiment situation rather favorable.
Last year ended quite successfully for German blue chips with a good +20%, to which a number of professionals reacted with a short position at the start of the year. 13 percent sold shares, 16 percent went short. The sentiment index fell quite low to -35 points. Joachim Goldberg sees several reasons for this: a leading index close to its record high is a good short story, many certainly do not believe in further highs without interruption and the mental clock is back to zero due to the turn of the year. The situation is different for private investors, 7% of whom have bought shares and whose sentiment index expresses less skepticism at +4 points.
All in all, however, the behavioral economist does not see any real change in sentiment. He expects demand from 16,350 points onwards due to closing positions. Which does not put German equities in a bad starting position for 2024.
3 January 2024. FRANKFURT (Goldberg & Goldberg). The DAX has now ended the past year with an impressive gain of just over 20% - a development that probably wasn't on the radar of too many investors. This is also the impression left by our sentiment surveys from last year, of which only 15 (i.e. just under 30%) showed a bullish result among institutional investors. However, the sentiment among private investors was more balanced, with just over half of the sentiment surveys showing optimism. However, these absolute figures on sentiment trends say very little about the success or failure of those involved in the stock market. Especially as it should not be forgotten that the DAX gain of a good 20% mentioned at the beginning is only a point comparison, a snapshot. After all, the path that prices have taken over the past year has been anything but clear.
It is likely that not all investors have returned to their workplaces from their Christmas vacation and have not yet gained a detailed overview and orientation. It is also likely that few people can imagine that the DAX will produce similar gains in 2024 as it did last year. Ultimately, however, the most pressing questions this year are likely to remain how inflation and growth will develop at a global level.
Good reference point for short exposures
Institutional investors with a medium-term trading horizon have now expressed themselves very clearly in the first sentiment survey of the new year. Our Börse Frankfurt Sentiment Index has fallen by 29 points to a new level of -35 compared to the last survey in 2023. In other words: We are dealing with a comparatively high level of pessimism, which is only slightly below the previous year's high.
The reasons for this repositioning are obvious. Many investors do not really want to believe that the upward trend of the DAX will continue uninterrupted in the coming weeks. In addition, it may have been tempting for the stock market barometer to come quite close to its all-time high (just above 17,000) during the reporting period, which is an ideal reference point for "good" short positions.
Clocks partially set to zero
On the other hand, this significant change in sentiment is probably largely due to the fact that the clocks were reset to zero in many places at the turn of the year and, at the same time, accumulated profits and losses were mentally written off.
However, the mood among private investors, who did not have to make this mental accounting cut at the end of the year, developed quite differently. The Börse Frankfurt Sentiment Index in this panel has risen by 11 points to a new level of +7. The most recent change in sentiment was driven almost equally by previously bearish and neutral investors.
With today's sentiment survey, a clear sentiment gap has opened up between private and institutional investors. The upcoming event risks (minutes of the last Federal Open Market Committee meeting and the US labor market report) may also have played a role in the rather cautious repositioning of institutional investors. However, we do not believe that institutional investors are actually betting on a sustained change in the DAX trend. Rather, we expect the new short positions to be closed out and corresponding demand at a lower level (possibly between 16,350 and 16,400 points). Seen in this light, the situation for the DAX at the beginning of the year is not as unfavorable as it might appear at first glance.
3 January 2024, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 21% | 56% | 23% |
To previous week | -13% | +16% | -3% |
DAX (change to previous week): 16.750 (unchg. to 20 December)
Börse Frankfurt Sentiment Index of institutional investors: -35 points (-29 to 20 December)
Bullish | Bearish | Neutral | |
Total | 44% | 40% | 16% |
To previous week | +7% | -4% | -3% |
DAX (change to previous week): 16.750 (unchg. to 20 December)
Börse Frankfurt Sentiment Index private investors: +4 points (+11 to 20 December)
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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