Dusseldorf The positive trend on the German stock market continues. In morning trading, the Dax reached a new record high of 16,283 points, but then went sideways. The stock market barometer is currently trading at 16,263 points, an increase of 0.1 percent.
The key question at the moment is: How far will the Dax rise? Because the series of new records does not seem to end. Since last week, that number has now been eight.
There is much to suggest that after an increase of 18 percent since the beginning of the year, the end of the year is now comparatively quiet. There should be no more correction in the remaining six and a half weeks, i.e. a decline of at least ten percent.
But even on the upside, according to the current status, the price potential seems to be rather limited in the remaining weeks. Quotes above 17,000 points will probably only appear in the first few months of the new trading year. Calculated from the record high, that would be another plus of 4.5 percent.
What speaks against a correction
The stock market year 2021 has so far followed the classic pattern. There were only two exceptions: The record high of 16,030 points in mid-August came at a rather unusual time. Usually, prices tend to be weak in this stock market month.
But what was much more remarkable: There has been no correction since the beginning of the year. The largest price decline from a high point was in October with minus seven percent. You have to look back to 2003 to find such an upward trend without a correction. At that time, however, the market recovered from the burst technology bubble.
It is unlikely to be of all things, there is a bigger setback than in October in an ongoing year-end rally. From a statistical point of view, the starting signal for the six best stock market months was given at the beginning of November.
Which speaks against 17,000 points at the end of the year
The Dax continues to climb new record highs, but the willingness to buy is declining. This can be seen from the falling trading turnover. Despite new records, only 53 and 56 million pieces were traded in the past two days. The average volume over the past four weeks was 60 million pieces per day.
The reason: the investment quota has risen significantly both among private investors and among international fund managers. This is borne out by the figures from the analysis company Animusx and the Bank of America survey of 345 investment professionals.
The cash quota in the portfolios of professionals has fallen to an average of 4.4 percent, after having reached 4.7 percent in October, the highest level in twelve months. On the one hand, this explains the rapid increase in the past few weeks and, on the other hand, allows the conclusion that there is no longer enough money to continue the rally at this rate. Since the beginning of October, the Dax has risen by around ten percent, an increase of more than 1400 points. The leading index is unlikely to be able to maintain that.
Such a low cash quota already existed in the summer months of this year. At that time there were constant new record highs, but they were not sustainable. At that time, the leading German index could not hold the new highs. At the same time, the subsequent setbacks were limited. It is quite possible that a similar scenario will repeat itself by the end of the year. That would mean: The Dax may climb new record highs, but the days of big price jumps are over.
Then only the start of the new stock market year would enable a new situation if the cards are reshuffled. After a look at the futures market, Thomas Altmann from the investment house QC Partners says that “derivatives traders and professional investors are betting that the stock market party will end in the new year at the latest”.
Look at the individual values
Siemens Healthineers: The takeover of the US cancer treatment specialist Varian is intended to give the medical technology group additional momentum over the next three years. For the financial years 2022/23 to 2024/25, CEO Bernd Montag announced sales growth of six to eight percent per year on a capital market day on Wednesday. Most recently, Siemens Healthineers had achieved almost six percent after adjusting for special corona effects. This news caused the stock to rise 3.7 percent.
Westwing: After a buy recommendation, the share certificates are on the up. The shares gain 11.6 percent, making them the biggest winner in the SDax. Jefferies has included the title with “Buy” in the rating.
Home24: The shares are a big SDax winner with a plus of 8.3 percent to 14.36 euros. Jefferies has included the titles of the online furniture retailer in the rating with a buy recommendation and a price target of 23 euros.
Encavis: The announcement of a hybrid convertible bond pushes the shares into the red. The shares of the wind and solar park operator fell temporarily in the SDax by 10.6 percent to 15.60 euros.
Volkswagen: After a downgrade, investors avoid the title. The carmaker’s shares lose 1.4 percent to 185.86 euros and thus keep the red lantern in the Dax. The analysts at Exane BNP Paribas have downgraded the stocks to “underperform” from “neutral”.
What the Dax chart technology says
A new upward gap was opened yesterday, Tuesday, the third since the end of October. This is a sign of strength as investors are willing to buy at suddenly higher levels in order not to miss a rally.
These gaps (technical jargon gap) arise when the lowest point of the trading day is above the highest point of the previous day. If they remain open, new record highs are likely to follow. Because investors are ready to step in at suddenly higher prices.
The last gap came about yesterday, Tuesday. As long as the Dax is above the daily high of 16,150 points on Monday of this week, this gap will remain open. The second gap from November 4th would be closed at 15,973 points. These two price gaps can – depending on the risk appetite – be used as a hedge on the underside.
Because if the second gap should be closed completely, there is a risk that the Dax will fall back into the multi-month sideways range between 16,000 points on the top and 14,800 points on the bottom.
On the upside, the previous record high of 16,277 meters will probably only be a transit station. From the month-long sideways phase between 16,000 and 14,800 meters, a further target price of 17,200 points can be derived in the longer term. According to chart technology, this trading range, i.e. 1200 meters, is a measure of possible price gains.
Here you go to the page with the Dax course, here you can find the current tops & flops in the Dax.