The professionals react with optimism to the recent price capers. Which, in Goldberg's view, tends to weigh on the market.
Despite the unchanged critical news situation, investors seem to want to take more risks again. The DAX has risen by 600 points since last Wednesday. Professional investors with a medium-term horizon have not moved at all, while private investors have taken 7 per cent out of short positions and 5 per cent have bought shares. The two sentiment indices now stand at +3 and +7 points.
Joachim Goldberg sees the behaviour mainly as a consolidation of existing opinions. The bulls believed in a trend reversal and the bears continued to bet on their overriding negative scenario. According to the behavioural economist, the price gains can be attributed to long-term oriented sources. On balance, he assesses the local sentiment as slightly bullish, thus only a small burden. Everything continues to depend on long-term capital flows.
12 October 2022. FRANKFURT (Börse Frankfurt). One can certainly divide the stock market development since our last sentiment survey into two sections. The first is last week and was characterised by great risk aversion on the part of the players, with the domestic DAX coming under pressure several times and ultimately marking a new low for the year, which was, however, only around 1.1 per cent below the survey price of last Wednesday. And this despite the fact that there was hardly any positive news. Negative news came mainly from Great Britain, where the Bank of England even had to support the bond market, which had come under heavy pressure, by buying long-dated government bonds after the government announced extensive tax cuts.
Risk appetite is back
At the same time, doubts were raised as to whether the US Federal Reserve in particular would be able to continue with its hawkish monetary policy stance. In fact, at the beginning of this week, the second section of our analysis, there was hope that the Fed might not raise the key interest rate as much and for as long as feared so far. This contrast to the negative news of the previous week, accompanied by some economic data perceived as positive, caused a return of risk appetite, which manifested itself in a veritable rally - the DAX gained around 5 per cent in a weekly comparison.
The result of today's survey is all the more surprising. Our Börse Frankfurt Sentiment Index of institutional investors with a medium-term trading horizon has not changed compared to the previous week with a score of +3. Nor can we detect any shifts - which is extremely rare - between the individual groups, at least on balance.
In contrast, the mood among private investors has changed much more clearly. Our Börse Frankfurt Sentiment Index for this panel has risen by 12 points to a new level of +7. As in the previous week, further bearish engagements were reduced, whereby around 70 percent of the players willing to change their opinion turned 180 degrees directly to "bullish".
Clear polarisation of opinion
While the majority of private investors still believe that the recent rally will continue, the opinion of institutional investors remains divided. Despite a DAX rise and a weekly range of around 6.8 percent, both bulls and bears have remained without reaction. This is particularly remarkable as both groups should have had enough gains on the clock in the meantime to realise them. The fact that this has not happened speaks for the firm belief in a larger price development. However, with different implications. While the pessimists seem to be betting on a continuation of the downward trend and have not been impressed by the recent rally ("it is only one of the typical temporary recoveries in a bear market"), the optimists seem to believe in a trend reversal.
On balance, however, it becomes clear that the impressive price gain of the DAX has taken place without sustained position changes of the medium-term oriented investors and is therefore likely to be mainly attributable to long-term oriented sources. And since the positioning of medium-term domestic investors (even on a three-month horizon) is only slightly bullish on balance, they are unlikely to contribute to major swings in the stock market barometer and thus represent only a slight burden for the DAX, whose fate seems to continue to depend primarily on long-term capital flows, at least for the time being.
12 October 2022, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 46% | 36% | 18% |
compared to last survey | +5% | -2% | -3% |
DAX (Change to last survey): 12,150 (-450 points)
Börse Frankfurt Sentiment index institutional investors: +10 points (last survey: +3 points)
Bullish | Bearish | Neutral | |
Total | 41% | 34% | 25% |
ggü. letzter Erhebung | +5% | -7% | +2% |
DAX (Change to last survey): 12,150 (-450 points)
Börse Frankfurt Sentiment index private investors: -1 point (last survey: +7 points)
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