Dusseldorf The friendly trend of the previous day initially continued on the German stock market. But at prices just above 15,500 points, profit-taking began. The Dax is currently down 0.1 percent with 15,400 jobs. On Tuesday, the Frankfurt benchmark was up two percent to close at 15,412 points, up 298 points. With today’s daily high of 15,542 points, the stock market barometer has already gained almost 700 points since falling to 14,844 points on Monday of this week.
Nevertheless, the leading German index has been stuck in an overall downward trend since the beginning of the year. If you weren’t aware of the imponderables of the markets, you could make a clear forecast: This downward trend will also remain intact in the coming trading days.
The negative trend would only end if the Dax climbed above the 15,620 point mark on a sustained basis, i.e. at the end of the day and the day after.
This is where the index failed last week – and the chances of clearing the hurdle have decreased. These three reasons speak in favor of an intact downward trend:
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1. Private investors lack the money
Retail investors are more likely to fail as the motor for an end to the downtrend. According to the data from the analysis house AnimusX from the weekend, they increased their investment quota compared to the previous week, so they have too little cash to buy the Dax further up.
This scenario could already be seen last week when the Dax climbed to 15,614 points for a few minutes, but a lack of demand caused the leading index to slide again. The failed attempts in August and September to surpass the 16,000 point mark were also accompanied by a high investment ratio.
2. Pros prefer short-term trades
Many investment professionals have done a good job in recent weeks because they have benefited enormously from the high price fluctuations. This is suggested by the weekly surveys conducted by the Frankfurt Stock Exchange among medium-term institutional and private investors.
Since mid-January, these pros have used price increases to sell and immediately bet on falling prices. The course that followed always proved them right. The profits from the short position were then realized at significantly lower price levels and the professionals went “long” again.
Some professionals even managed another feat: They realized their short profits at prices of around 15,200 points, but only half then backed up prices again. Those pros who held back were rewarded with entry prices well below 15,000 points this Monday. “As a rule, one trusts the professionals, while the private ones are often seen as a counter-indicator,” says sentiment expert Stephan Heibel from AnimusX.
It is unlikely that the pros will stop this behavior, e.g. expect courses towards 16,000 points. The short-term trades in the past few weeks have been too successful for that.
The high trading volume, coupled with the significant price fluctuations in the past few days, also signals that the market is currently not good for long-term believers – short-term trades are more in demand. To put it bluntly, it’s a gambler’s market.
3. Massive resistances in the 15,620 point area
According to the technical analysis, not only the downward trend line is in the area of 15,620 points, but also a hodgepodge of important resistance that needs to be overcome.
Among other things, the three most important average lines are noted there: the 38-day line for the short-term, the 100-day line for the medium-term and the 200-day line for the long-term trend. An unusual chart technical situation that underscores the importance of the 15,620 point level.
Concerns about interest rates are eclipsing the Ukraine conflict
There is currently a change of subject in the market. The Ukraine conflict is losing some of its horror for the stock exchanges, as is also shown by the falling oil prices, which are an indicator of this conflict. A barrel (159 liters) of North Sea Brent and US WTI is currently trading between 92 and 93 dollars. Yesterday, Tuesday, prices were still between 96 and 97 dollars.
In return, the interest rate issue is back on the agenda. The unexpectedly sharp rise in US producer prices on Tuesday pushed the yield on the ten-year US Treasury bond back above the two percent mark. This value is currently 2.0452 percent. According to the so-called Fed Watch Tool of the Chicago derivatives exchange CBOE, the US Federal Reserve Chairman Jerome Powell is likely to raise interest rates by 50 basis points on March 16th. At least that’s what more than 60 percent of professionals expect. The rest believe in a hike of just 25 basis points.
Look at the individual values
MTU: The engine builder is still feeling the consequences of the corona pandemic. According to information from Wednesday, the company generated sales of almost 4.2 billion euros last year, which corresponds to an increase of five percent. The Munich team missed the self-imposed mark of 4.3 to 4.4 billion euros. When it comes to profits, however, MTU benefited from its austerity measures. As a result, the share rose by 2.4 percent. The paper thus leads the Dax winner list.
Amadeus Fire: The business numbers do well on the stock market. Shares are up 0.8 percent. According to initial calculations, the personnel service provider exceeded its already raised annual targets in 2021.
Siemens Healthineers: The paper is traded with a dividend discount on Wednesday. The closing price on Tuesday was EUR 56.02, the dividend is EUR 0.85. The share is currently trading at EUR 55.08.
Norma: The papers rose by up to 8.3 percent to a three-week high of 34.18 euros. Thanks to cost-cutting measures, the automotive supplier achieved its reduced targets for the year as a whole. However, the margin was a little worse than hoped, said a trader.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.