No chance of a favorable entry, the brake at 17,000 and the flood of news is causing some professionals to switch to the bear side. Private investors are remaining bravely optimistic. According to Goldberg, this is a good starting position.
Although the DAX has gone straight up since last Wednesday, it has nevertheless remained stuck at the 17,000 mark. So Joachim Goldberg is hardly surprised by the reaction of the professionals. 6 or 7 percent have switched from the long to the short side. The sentiment index falls to -6 points. The behavioral economist reminds us that this tactic has already worked once this year. The situation is different for private investors, some of whom have bought shares and whose sentiment is significantly better at +17 points.
Goldberg expects that the small group of very active professionals looking for a little extra return will probably cover again from 16,550 and 16,600 DAX points. So some support, but not too much. Further price gains would catch some bears on the wrong foot. All in all, this would slightly improve the DAX's position in terms of sentiment compared to the previous week.
31 January 2024. FRANKFURT (Goldberg & Goldberg). Even though the DAX has only seen a trading range of 1.4% since our last sentiment survey - the smallest weekly range so far this year - it is unlikely to have been an easy week for many traders for three reasons. Firstly, because there was practically no more favorable entry price for would-be bulls compared to last Wednesday's price increase. Secondly, because the DAX failed to break through the 17,000 mark during this period, which would have meant a new all-time high. And thirdly, with the Federal Open Market Committee meeting ending tonight (CET), the forthcoming publication of the US labor market report on Friday and the series of quarterly figures from major US tech companies that started yesterday, there were several event risks for investors to consider.
It is therefore not surprising that sentiment among the institutional investors we surveyed with a medium-term trading horizon has deteriorated again compared to the previous week. Our Börse Frankfurt Sentiment Index fell by 13 points to a new level of -6. The increase in bearish sentiment, which is largely attributable to previously bullish investors who have turned their investments around 180°, is therefore easy to explain.
Steadfast private investors
It remains to be seen whether this renewed skeptical attitude is due to a certain risk aversion or whether the temptation to establish a short position shortly before the all-time high in connection with a round number was perhaps too great. After all, this strategy has already paid off at the beginning of the year.
Interestingly, private investors did not allow themselves to be tempted by the mixed situation mentioned at the beginning. On the contrary: the Börse Frankfurt Sentiment Index of this panel even rose by 3 points compared to the previous week to a new level of +17. Apart from minor shifts in positions, private investors have therefore maintained their bullish orientation on balance.
New pessimists hope for extra returns
So while the majority of private investors have decided to continue to bet unwaveringly on rising share prices, the same cannot ultimately be said of institutional investors. Of course, this is only a small active group that may generate some extra returns in the hope of a setback in the DAX and cover the latest short exposures at a lower level (presumably between 16,550 and 16,600 DAX points). Although this demand provides some support for the DAX, it would only be able to withstand a larger wave of selling - triggered by long-term capital outflows - temporarily at best. Especially as the pessimism is manageable.
On the other hand, today's new bears will face considerable problems in the event of a direct DAX rise. Not only would the hoped-for extra return not materialize, but in this case they would also be underweight in equities in the wake of new record prices - a position that would then be difficult to justify.
The bottom line is that the DAX position has improved slightly in terms of sentiment compared to the previous week.
31 January 2024, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 33% | 39% | 28% |
To previous week | -6% | +7% | -1% |
DAX (change to previous week): 16.980 (+210 to previous week)
Börse Frankfurt Sentiment Index of institutional investors: -6 points (-13 to previous week)
Bullish | Bearish | Neutral | |
Total | 50% | 33% | 17% |
To previous week | +1% | -2% | +1% |
DAX (change to previous week): 16.980 (+210 to previous week)
Börse Frankfurt Sentiment Index private investors: +17 point (+3 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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