Despite the fairly high levels, some professionals are switching from bullish to bearish, while private investors are staying put. Not bad, but also not a good starting position for further gains, Goldberg believes.
Despite positive conditions, the mood of investors in Germany continues to be in the basement. 5 percent of professionals have sold, 3 percent have gone short. The sentiment index of this group is well below zero at -15 points. Joachim Goldberg suspects profit-taking near the previous record level behind this. Private have done little, their sentiment level is a little better at -8 points.
The behavioral economist believes, however, the recent bearish positions downward already towards 15,875/925 are covered again. "However, this demand is unlikely to withstand a stronger selling wave." In relative terms, he rates the sentiment as neutral. That's why the bears are unlikely to be a price driver of further gains this time. Perhaps, Goldberg hopes as a basic optimist, the proximity of the all-time high will again attract more international capital.
14 June 2023. FRANKFURT (Börse Frankfurt). One could literally hear the gnashing of teeth of many a bearish strategist in the U.S. when the broad-based S&P 500 stock index there exceeded the ominous 20 percent mark on a closing basis last Thursday. At the time, this was the gain that the index had been able to record since last October and which, by popular definition, marked the beginning of a new bull market.
Indes: As the latest Bank of America survey published yesterday showed, international fund managers are apparently still globally underweight in equities, even more so than in the previous month. After all, the slight overweight in eurozone equities has hardly changed since the May survey. In Germany, the DAX has also risen again since our last sentiment survey, gaining 2 percent on the reporting date, with the all-time high at the time of the survey not too far away.
Not really risk averse
Today's survey of local institutional investors with a medium-term trading horizon was once again naturally ahead of today's Federal Open Market Committee (FOMC) meeting and tomorrow's ECB meeting. After all, the outlook for today seems relatively clear, as participants in the financial markets almost all assume that the Fed will leave the key interest rate unchanged at the end of the meeting this evening (CEST).
Nevertheless, the mood has worsened, as our Börse Frankfurt Sentiment Index fell again by 8 points compared with the previous week to a new level of -15. Not least because some of the optimists from the previous week have realized their gains. In any case, the group of bulls has fallen by five percentage points, with slightly more than half of the former optimists having turned their position 180° directly to bearish. In this context, not so much fundamental aspects, but also the all-time high of the DAX, which is practically in front of the nose, may have been an important selling motive.
Among private investors, meanwhile, sentiment improved slightly for the third time in a row, but only by 2 points, so that our Börse Frankfurt Sentiment Index still looks slightly negative in this panel, with a new reading of -8. In fact, a very small group of previously bearish investors has given up and moved to the sidelines.
Reliant on long-term capital flows
Today's survey has again opened up a gap in sentiment between private and institutional investors. Particularly among the latter, however, the change in sentiment - spurred by the recent gains - is likely to be of a rather short-term nature. Thus, it can be assumed that the recent bearish positions will be covered again already in case of a setback towards 15,875/925. However, this demand is unlikely to withstand a stronger selling wave.
Looking at three and six months, today's pessimism of institutional investors relativizes anyway, so that today's Börse Frankfurt Sentiment Index reading of -15 largely disappears. Thus, the market sentiment is actually still to be classified as neutral, although the situation for the DAX has improved minimally compared to the previous week. Perhaps a DAX performance well above its previous all-time high will provide a magnet for long-term capital flows. In any case, the mood among domestic investors is not negative enough to add fire to the DAX's upward trend.
14 June 2023, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 27% | 42% | 31% |
to prev. week | -5% | +3% | +2% |
DAX (to previous week): 16.270 (+320 points)
Börse Frankfurt Sentiment-Index institutional investors: -15 points (-8 points to previous week)
Bullish | Bearish | Neutral | |
Total | 32% | 40% | 28% |
to prev. week | +0% | -2% | +2% |
DAX (to previous week): 16.270 (+320 points)
Börse Frankfurt Sentiment-Index private investors: -8 points (+2 points to previous week)
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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