Some investors are running out of share price imagination, says Joachim Goldberg. 2 percent of professionals as well as 2 percent of private investors have sold shares since last Wednesday, 3 and 5 percent respectively have gone short. The sentiment indices fall slightly to 5 and 9 points. Profit-taking with partly direct hedging is suspected by the behavioral economist.
Even if a possible bubble plays a role in the media: Goldberg does not see a "hot stock market". There is much to be said for a sideways movement with support buying from 13,450/13,500 DAX points and profit taking on the upside around 14,200/14,250 points with a slight upward trend.
27 January 2021. FRANKFURT (Börse Frankfurt). It has been less than a week since Joe Biden was sworn in as the 46th President of the United States and, especially in the U.S., this event was followed by a small fireworks display on the stock markets. The reaction here in Germany, however, was rather manageable with regard to the DAX: After an initial rise of around 1.1 percent and a recent flying visit to the 14,000 mark, there has been a significant setback since last Wednesday, which had a peak of around 3 percent.
One could also say that a certain disillusionment has set in among many players. On the one hand, fears of uncontrollable Covid 19 mutants spread, as did fears that Covid 19 vaccinations could possibly be delayed, especially here in Germany. On the other hand, it may have become clear that the announced U.S. stimulus package of around $1.9 trillion is nowhere near as fast as originally hoped - the first parts of the package are reportedly unlikely to take effect until mid-March at the earliest - and is unlikely to pass the U.S. Senate smoothly. In short, the players felt as if they were back in the day-to-day business - even if the threat of bubbles continues to be discussed in many places.
Little upward fantasy
That the fantasy for a continuation of the upward trend of the DAX is not too big is shown by the latest sentiment picture of the medium-term oriented institutional investors surveyed by us. The Frankfurt Stock Exchange Sentiment Index has fallen by 5 points and now stands at only +5. The position changes behind this seem to have remained manageable and can be traced back to profit-taking by a few bulls from the previous week, who have moreover turned to the bear side. It is quite possible that one has been satisfied here and there in the absence of fresh upward impetus with comparatively small gains.
We can see a similar development for the private investors. In this panel, the Börse Frankfurt Sentiment Index has also retreated, and in this case we register a decline of 7 points to a new level of +9. Here, too, there have been a few bullish players who have turned their positioning 180° to "hedge". However, these more short-term oriented investors are joined by previously neutral participants who are betting on a setback in the stock market barometer.
Bullish appetite is gone
Today's survey shows two things. First, in the absence of new price-driving impulses, the appetite for larger bullish engagements is currently limited. In this context, it is noticeable that the profit-taking by some optimists during the reporting period already set in relatively early, probably after a recent breach of the 14,000 mark. On the other hand, at least the topic of a possible bubble formation in the stock markets, which has recently been hotly discussed in the Anglo-Saxon media in particular, seems to be causing little excitement in this country. At least the current positioning does not point to this - major hedges have failed to materialize. The relatively small shifts in sentiment suggest that the interim setback of the DAX to around 13,600 points was obviously not yet attractive enough for would-be buyers. We expect their greater demand only between 13,450 and 13,500 DAX points anyway.
Given the only slight optimism of institutional market participants, it is not possible to speak of a hot stock market. Not even in a multi-month comparison. In fact, the situation of the DAX has improved again compared to the previous week, although there is much to be said for a sideways movement (upper limit probably in the area of 14,200/250 DAX points) with a slight upward trend.
27 January 2021, © Goldberg & Goldberg for boerse-frankfurt.de
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