The DAX continues to make up ground, this time the local investors take profits. At least the professionals, of which 12 percent have sold and moved to the sidelines. The sentiment index of these investors now stands at +7 points. Which Joachim Goldberg sees as relatively neutral. The situation is different for private investors, 3 percent of whom bought shares and whose sentiment index now stands at +20 points in bullish territory.
Nevertheless, the behavioral economist is not negative. Profit takers are likely to want to get back in from 14,250/14,300 in order not to miss anything. Moreover, the constant share of pessimists would suggest that medium-term oriented investors did not expect major downward corrections.
17 March 2021. FRANKFURT (Börse Frankfurt). The DAX has been remarkably quiet since our last sentiment survey. Since then, the trading range of the stock market barometer has been just 1.3 percent. Nevertheless, at just over 14,600 points, we were able to record a new all-time high. Now this relative calm may be due to the meeting of the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve ending today. A meeting from which one can probably expect no changes in monetary policy, but at least new assessments regarding growth and inflation.
Yesterday's publication of the Bank of America fund manager survey made it clear that inflation is currently playing an important role for international investors. Fear of surprisingly high inflation now ranks first among the market risks perceived as the most threatening. The risk of a so-called "tantrum", a sudden wave of selling on the US bond market, is not considered to be significantly lower in the March survey. Almost at the bottom of the list, fund managers ranked the risks that could arise in connection with the Covid 19 pandemic in third place. On balance, however, international investors are extremely optimistic. A net 91 percent of respondents - more than ever before - expect the economy to improve over the next twelve months, and a record net 89 percent expect corporate profits to grow.
Delayed exit
We had been slightly surprised last week that institutional investors were reluctant to take their profits despite the significant rise in the DAX but this has now apparently been made up for. Because our Börse Frankfurt Sentiment Index has fallen back by 12 points to a new level of +7. It is remarkable that this decline is exclusively due to pure profit taking. Of the 12 percent of all respondents who left the bull camp, virtually all switched to neutral sentiment - so on balance, there were no new bearish engagements.
The situation was quite different for private investors, whose Börse Frankfurt Sentiment Index even rose by 3 points to a new level of +20. This slight increase is due to formerly neutral players who have now joined the optimists. We recall: five weeks ago, the sentiment index of this panel was at a level of +5 (annual low) and has since improved peu à peu - just like the DAX. In other words, even a rise in the stock market barometer of just under 3.9 percent during this period (in terms of points alone) has not been enough to provoke a major wave of profit taking.
They will return
In contrast to the markedly optimistic stock market sentiment of international investors, investors in this country are remarkably cautious. The Frankfurt Stock Exchange Sentiment Index of institutional investors of +7, both in comparison with the previous surveys of this year and in the relative 6-month view, cannot even be classified as optimistic, but at best as neutral.
Of course, experience shows that this is good news for the further development of the DAX. After all, those investors who have recently taken their profits are likely to want to get back in at a manageable setback in the DAX (possibly between 14,250 and 14,300 points) in order not to miss the next rally. In short, there is a fundamentally optimistic attitude, and the share of pessimists, which has remained the same, also suggests that players expect moderate downward corrections at best, but no major ones.
17 March 2021, © Goldberg & Goldberg for boerse-frankfurt.de
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