Dax is wrestling with the 16,000 point mark – the professional buy mark slides one floor below

Dusseldorf The 16,000 point mark currently plays an important role on the German stock market. The Dax hovered around this level for several hours before expectations of a friendly opening on the US stock exchanges drove the price up further. In the afternoon on Thursday, the Dax was trading at 16,074 positions, up 0.4 percent. The day before, the leading index had fluctuated around 110 points around this psychologically important mark and went out of business with 16,010 points, an increase of 0.4 percent.

Many professional investors started the new trading year with profits. This is shown by the data from the weekly survey conducted by the Frankfurt Stock Exchange among medium-term oriented institutional and private investors.

Ten percent of the professionals surveyed used the price slide between Thursday last week and Monday this week to close their short positions with profits. More than two thirds then switched to the long side. The previously more optimistic private investors, however, were frightened by the falling prices and sold paper.

What does this mean for the coming trading days? From the data it can be seen that the majority of investors do not expect any strain from a possible tightened monetary policy of the US Federal Reserve in the coming weeks. That speaks for further rising prices.

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The positive mood is not yet euphoric either. According to the sentiment analysis, euphoria is a contra-indicator and rather signals falling prices because then, in simple terms, there are only a few buyers.

The behavioral economist Joachim Goldberg, who oversees the survey, also believes that a new record high for the leading German index is possible, i.e. prices above 16,290 positions. He expects the first profit-taking, possibly in the range of 16,400 to 16,450 points, but this should only be a “temporary obstacle”.

If this analysis of investor sentiment is supplemented with signals from chart technology, the following picture emerges: If the Dax should climb above the 16,156 mark, the starting point of the price slide last week, the situation should improve significantly. The probability of new record highs would then be significantly greater.

Despite the positive starting position for a new record high, the situation for the Dax has deteriorated somewhat overall. Because on the underside, the risk has increased significantly.

Goldberg had expected a week ago that the pros in the 15,800 / 15,850 point range would close their short exposures and bet on rising prices. With this forecast, he was overall correct, even if the Dax slipped to 15,724 positions for a short time.

But with the purchases made, this brand has become obsolete. As usual in most cases, the new entry level then slides down one floor. This could now possibly be 15,550 / 15,600 positions.

But the former foreign exchange trader believes it is “difficult to assess whether further domestic demand from our investors will be sufficient in the event of another setback (…) to sustainably support the stock market barometer”.

In addition, there could be capital outflows from long-term oriented international investors. Prices below 15,800 meters would probably be a warning that the Dax could fall significantly lower.

US reporting season begins

A third dominant topic alongside US monetary policy and the Omikron variant begins today, Thursday: the reporting season in the USA begins. Delta Air Lines made the start and exceeded estimates with both sales and earnings. The share price increases by 1.2 percent on the German market.

Financial firms Blackrock, Wells Fargo, JP Morgan and Citigroup will follow on Friday. Bank numbers have a huge impact on prices because they reflect the state of the entire economy.

The expectations for the reporting season are high. A further increase in corporate profits is considered set. For Thomas Altmann from the investment house QC Partners, the “question on the floor is not whether profits have increased, but how much have they increased”. Without further increases in profits, the current high prices and valuations would hardly be justifiable.

Look at the individual values

Real estate stocks are among the biggest winners of today’s trading day, above all the Adler Group. The company has taken the next step towards debt relief and sold 14,400 residential and commercial units to the private equity investor KKR. The expected net proceeds are around 600 million euros. The Adler share rose by 4.5 percent to 11.87 euros.

That sale was apparently enough to lift general shareholder sentiment for the industry. All real estate stocks from the MDax small cap index climbed upwards. Aroundtown stocks rose 1.45 percent, followed by Tag Immobilien with an increase in value of 0.7 percent and LEG Immobilien with an increase of 0.5 percent.

The papers from the health sector, the previous corona profiteers, are on the losing side. The shares of the manufacturers of diagnostics specialists such as Qiagen and Siemens Healthineers, the laboratory supplier Sartorius and the pharmaceutical company Merck KGaA lost up to 2.3 percent in value on Thursday. They gathered among the biggest DAX losers. These losses are an indication that the corona pandemic is likely to weaken with the Omikron variant.

Hella: The auto supplier suffered a significant drop in profits in the second quarter of the business due to the sluggish auto economy. However, the share rises by 0.3 percent. Investors expected such weak numbers.

Hella has been majority owned by the Faurecia Group since November. The French have secured 79.5 percent of the Hella shares. However, the takeover has yet to be approved by the authorities. This was last calculated at the beginning of 2022. The activist US investor Paul E. Singer is now also involved with Hella with 10.75 percent.

K + S: After a buy recommendation, the share gained 3.8 percent. The analysts at Berenberg Bank have upgraded the stocks to “buy” from “hold”.

SMA Solar: The solar technology group is cutting its expectations of profit development in the past year drastically. A service contract for photovoltaic power plants (O&M business) causes problems. The share listed in the small value segment SDax last dropped 6.6 percent on Thursday. Jefferies analyst Constantin Hesse estimates the expected special burden at 30 million euros.

Infineon: TSMC’s record win creates a good mood in the chip industry. Thanks to the high demand for semiconductors for smartphones, laptops and other technical devices, the net income of the world’s largest chip contractor climbed by around 16 percent from October to December to 166.2 billion Taiwan dollars (the equivalent of 5.26 billion euros). The shares of Infineon, STMicro, ASML Holding, ASM International and BE Semiconductor move up between 1.4 and 4.5 percent.

Genting Hong Kong: After the bankruptcy of MV Werften, the shares of the Asian owner Genting resumed trading in Hong Kong with heavy losses. The papers fell after a four-day trading break by 56.2 percent – the largest daily loss since the stock market debut in November 2000. The cruise company claims that it can no longer service loans of just under 2.8 billion dollars as a result of the bankruptcy in Germany.

Here you go to the page with the Dax course, here you can find the current tops & flops in the Dax.

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