Despite the dampening of prices on the stock market, in the course of up to 2.5 percent, the mood of local, medium term investors has improved slightly. 6 percent of professionals and 3 percent of private investors have bought shares, a part of them closed the short engagements. The sentiment indices rose to +10 and +13 points, respectively.
Joachim Goldberg suspects that the price dip was used for a favorable entry. However, the time window for buying between 13,650 and 13,700 points, which the behavioral economist had expected, was probably too short for a stronger movement. Therefore, Goldberg evaluates the current sentiment as relatively neutral, which would lead to the expectation of further purchases at this very threshold. Upwards, he sees hardly any obstacles, at best a mini-correction around the previous record high.
24 February 2021. FRANKFURT (Börse Frankfurt). It is certainly no secret that a large majority of financial market players expect global growth and inflation to rise in the coming twelve months. It is also well known that many international fund managers currently consider the rise in inflation to be one of the biggest extreme risks (see February survey by Bank of America).
Now the bond markets in the U.S.A. but also here in Germany have made it clear through the significant rise in yields in February that it is not only reflation expectations that are driving investors. In the U.S.A., not only was the rise in consumer prices to the central bank's inflation target of 2 percent under discussion, but in view of excellent retail sales and significantly higher price components in the U.S. purchasing managers' indices last week, fears were spreading in the minds of some market participants that price buoyancy could even develop more strongly than desired. In short, there was even talk here and there of a specter of inflation. No wonder that as a result of the aforementioned, possibly too rapid rise in yields, the stock markets now also received a damper. Since our last sentiment survey, the DAX in Germany has lost up to 2.5 percent of its value at times although it has been able to recoup a large part of this loss to date.
Hesitant investors
Did the medium term institutional investors we surveyed see this setback in the DAX as an invitation to buy? At least partially. After all, our Börse Frankfurt Sentiment Index has risen by 10 points to a new level of +10. This means that the group of optimists has increased by almost 20 percent, but the window of opportunity for the setback to the zone between 13,650 and 13,700 DAX points that we have targeted was possibly not open long enough to offer a good dip-buying opportunity to all the former bears on our panel. However, it is also quite possible that in many places, in view of the feared inflation risks and the associated even higher bond yields, people simply wanted a higher risk premium for additional bullish positions.
Private investors, however, were much less willing to buy into the weakness of the DAX, with the Börse Frankfurt Sentiment Index rising by only 3 points to a level of +13. Apparently this panel lacked the appetite to once again enter into larger commitments at more favorable prices in the uptrend. Especially since this strategy has already gone well so often in the eyes of some players that they are increasingly worried about running into a major downward correction of the DAX.
Rewarded courage
In the meantime, the brave have obviously been rewarded. But the number of those who could have bought again has fallen well short of our expectations. And as far as the new optimism is concerned, it is quite moderate - in a relative three-month comparison, one can even speak of a neutral positioning of the players. In other words, in the event of further setbacks in the stock market barometer, there is still plenty of potential demand from domestic sources to cushion a major correction. However not before the range between 13,650 13,700 points.
On the other hand the way up is not paved by too many obstacles. Although there may be profit-taking by today's new bulls, this should at best lead to a short term disruption. The cautious optimism and the small weekly loss of 0.5 percent mean that the DAX is in a decent starting position for a consolidation below the previous DAX highs (around 14,170). Combined with the option that on the upside also significantly more can come out.
24 February 2021, © Goldberg & Goldberg for boerse-frankfurt.de
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