Little movement, hardly any opportunities - many prefer to pull back. Which means potential for further price gains, as Goldberg analyzes.
The narrow price range in which German blue chips have moved since last Wednesday offered few entry opportunities for those who did not participate in last week's gains. The bottom line is that sentiment among professionals has remained the same at +17, but there has been some change. 7 percent have switched from the long to the short side. The situation is different for private investors, 7% of whom have switched from long to short. Nevertheless, their sentiment is slightly better at +24 points.
In relative terms, Joachim Goldberg rates the sentiment of the professionals as less positive. Which could be useful for the market. At 35% of respondents, the group on the sidelines is quite large and could provide downside support if sellers want to come back as buyers again this year. The behavioral economist expects this to happen from 15,750/15,800. And on the upside, few bears are likely to actively put the brakes on.
29 November 2023. FRANKFURT (Goldberg & Goldberg). It almost turned out to be the quietest week of the year for the DAX. But then, shortly before the end of our sentiment survey today, some preliminary inflation figures were published from Germany, which gave the stock markets some momentum. However, despite this positive impetus, the trading range of around 1.2% is one of the lowest recorded in 2023. Of course, it can be argued that the US Thanksgiving weekend inevitably drained momentum from market activity. Nevertheless, it is striking that DAX setbacks were once again much smaller than hoped for for some players, meaning that there was once again no good chance of somehow still being able to participate in the rally that has been taking place since the beginning of November. Especially as the general conditions in the USA in particular - for example because the cycle of interest rate hikes there is increasingly likely to have come to an end - continue to appear favorable.
Given this comparatively calm market environment, it is not surprising that the sentiment of the institutional investors we surveyed with a medium-term trading horizon has not changed on the surface. Our Börse Frankfurt Sentiment Index remains at +17.
Winners and losers neutralize each other
However, a look behind the scenes shows that a lot has happened since last Wednesday. The polarization between bulls and bears has fallen significantly - both groups have each fallen by 7 percentage points in favour of the neutral players. A reduction in polarization of this magnitude is extremely rare and was last seen 17 years ago. On the one hand, this is due to significant profit-taking on the part of the bulls, who are countered by an equal number of bears who have apparently thrown in the towel in the face of the fourth consecutive weekly rise in the DAX.
On the other hand, there has been a clear change in sentiment among private investors. This is because the Börse Frankfurt Sentiment Index has fallen sharply in this panel, namely by 15 points to a new level of +24. The bottom line is that a particularly active group of private investors appears to have turned its position 180° from "bullish" to "bearish". After all, the majority of these are the 7% of all respondents who would like to try their luck on the other side after profitable weeks - possibly only with small positions.
Who comes back and who stays away
With today's survey, the sentiment gap between private and institutional investors has narrowed significantly. Among the latter, it is striking that optimism, as measured by the Börse Frankfurt Sentiment Index, has fallen to just under +7 in relative terms over a three-month period, marking the fourth consecutive decline. This means that the prevailing optimism has practically diminished to such an extent that the technical sentiment of the DAX has improved once again compared to the previous week.
On the one hand, this is because the group of neutral sentiment players is large enough, accounting for 35% of respondents, to provide the DAX with a decent level of support in the event of price declines. After all, it could well be that the successful former bulls, who have now left, would like to return as buyers this year. Naturally at significantly lower prices than is currently possible. In this context, we expect initial demand in the range between 15,750 and 15,800 DAX points.
On the other hand, however, it is questionable whether the recently battered bears will try their luck again in the event of a price rise, even with the end of the year approaching. All in all, a favorable starting position for the DAX.
29 November 2023, © Goldberg & Goldberg für boerse-frankfurt.de
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Bullish | Bearish | Neutral | |
Total | 41% | 24% | 35% |
To previous week | -7% | -7% | +14% |
DAX (change to previous week): 16.100 (+145 to previous week)
Börse Frankfurt Sentiment Index of institutional investors: 17 points (unchg. to previous week)
Bullish | Bearish | Neutral | |
Total | 54% | 30% | 16% |
To previous week | -8% | +7% | +1% |
DAX (change to previous week): 16.100 (+145 to previous week)
Börse Frankfurt Sentiment Index private investors: +24 points (-15 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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