The price gains of German blue chips have put pressure on professionals in particular to switch positions with losses.
The DAX's return to the profit zone has mainly affected bearish professionals. 22% have exited their short positions, a third of them directly on the long side. According to Joachim Goldberg, the other two thirds were forced out of the market with losses. In any case, the sentiment index jumped 30 (!) points to +22. The starting position for private investors was less pessimistic. Only 5 percent have switched from short positions and 8 percent to the long side. Sentiment has risen less sharply at +14 points.
All in all, the behavioral economist does not rate this scenario as extreme despite the strong movement. On the downside, he expects buying from the sidelines. And there should be little braking force on the upside. So the starting position remains favorable.
24 January 2024. FRANKFURT (Goldberg & Goldberg). Anyone who had expected January to be a weak month on the stock market because the last two months of the previous year had ended on an extremely positive note for the DAX has so far been proved wrong. The stock market barometer is practically unchanged compared to the end of the previous year. Of course, the month is not over yet, and those who were clever enough to be bearish were able to benefit from a setback in the DAX, at least in the meantime. Seen in this light, the pessimists at the beginning of the year were not so wrong. But in many places, a stronger downward correction may have been expected. And now the DAX is only a stone's throw away from its previous all-time high - especially after the new record highs of US stock indices. Especially as it was able to strengthen by 2.3% week-on-week.
Since our last sentiment survey of institutional investors with a medium-term trading horizon, there has been a significant change in sentiment. Although there were only a few more favorable buying opportunities compared to last Wednesday's survey, our Börse Frankfurt Sentiment Index has risen by a whopping 30 points to a new level of +7.
Waiting on the sidelines
Bearish positions were liquidated on a large scale - 22% of all respondents left the camp, but only just over a third of them, presumably because they were profitable, switched directly to the bull side, with the vast majority joining the neutral players. At the same time, the Börse Frankfurt Sentiment Index is at its highest level since the end of November last year.
Meanwhile, a small majority of private investors had already bet on a DAX rise last week and were thus possibly sometimes one step ahead of their institutional investors. The Börse Frankfurt Sentiment Index in this panel rose by 13 points compared to the previous week to a new level of +14; the last time optimism was higher was on December 6 last year. At the same time, the bull camp has risen by 8 percentage points, with a slight majority at the expense of previously bearish investors.
No extreme values
Today's survey at least shows that, in contrast to the previous week, private and institutional investors are once again pulling in the same direction in terms of sentiment and the sentiment gap between the two panels has narrowed. Even though we have recorded the highest levels of optimism this year in both panels, these are by no means extreme values. This is also evident among institutional investors over the past three and six months.
Among institutional investors in particular, it is also becoming apparent that the DAX correction is unlikely to have led to pleasing successes for all former bears. This is also indicated by the fact that the majority have decided to stay on the sidelines for the time being - the percentage of neutral investors is now at its highest level this year. It is quite conceivable that at least some of them will turn to the bull side as soon as the DAX offers a favorable entry opportunity in the event of another setback.
Even if, on the other hand, it can be assumed that the recent rise in the DAX is at least partly home-made, the still relatively low level of optimism means that there should not be too strong a headwind against any further strengthening of the stock market barometer, at least from this side. In other words, the favorable starting position for the DAX has changed very little.
24 January 2024, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 39% | 32% | 29% |
To previous week | +8% | -22% | +14% |
DAX (change to previous week): 16.770 (+370 to previous week)
Börse Frankfurt Sentiment Index of institutional investors: +7 points (+30 to previous week)
Bullish | Bearish | Neutral | |
Total | 49% | 35% | 16% |
To previous week | +8% | -5% | -3% |
DAX (change to previous week): 16.770 (+370 to previous week)
Börse Frankfurt Sentiment Index private investors: +14 point (+13 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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