Dusseldorf The leading German index extends its losses in the course of trading and is down 0.8 percent in the afternoon and is trading at 14,436 points, a minus of 120 points. Yesterday, Tuesday, the stock market barometer was 0.7 percent lower and ended trading at 14,556 points.
A look at the past five trading days shows a so-called sawtooth market. The Dax took a different direction than the day before. Should the leading index close in the black this Wednesday, it would be the sixth day in a row with a change of direction. Such a sawtooth market indicates short-term uncertainty among market participants about the future direction.
According to the Handelsblatt survey Dax-Sentiment, however, there should still be further upwards, and for the technical analyst Martin Utschneider from the private bank Donner & Reuschel, several indicators also suggest a technical consolidation, a breather within an intact upward trend. For today’s trading day, Utschneider expects the Dax in a range of 14,709 points on the top and 14,359 points on the bottom.
In the past four weeks, the index has climbed around 1,300 points to today’s level. Normally, six weeks is the typical extent of short to medium-term fluctuations in the Dax. Following this pattern, a phase of rises is followed by several weeks of declining prices.
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For example, the leading German index climbed from 13,368 to 15,501 points from the beginning of March to mid-April last year, before a six-week consolidation then began. The drop from 14,925 points at the end of March to 13,380 points on May 9 of this year also corresponded to this pattern.
According to technical analysis, the Dax still has the potential to rise to between 14,800 and 15,000 points in the coming days. There is a resistance that is important for the further course, which, conversely, offered significant support in the stock market year 2021.
Investors are obviously of the opinion that the Dax will not exceed the 15,000 point mark. Because in parallel with the rising prices, the Euwax sentiment on the Stuttgart Stock Exchange, where private investors trade, has now slipped to minus ten. Investors are therefore increasingly protecting themselves against falling prices. In the past twelve months, there has only been a higher hedge three times.
Institutional investors who hedge themselves via the Eurex derivatives exchange have also increasingly bought put protection, the value of which increases when prices fall. This view is also confirmed by the Handelsblatt survey Dax-Sentiment. Only one in four respondents expects prices to rise in the next three months.
Experienced investors know what that means. If, contrary to expectations, the Dax climbs above the 15,000 point mark, many would be caught on the wrong foot and would have to chase the rising prices.
Then the mix of relief purchases, new investments and short coverings could even lead to a surprising rally with sudden so-called short squeezes, to brilliant price jumps without fundamental news.
A preliminary decision as to which future path the Dax will take could be made in the coming weeks when the US Federal Reserve meets. Even if a subsequent consolidation of several weeks on the German stock market is the most likely variant, moderate tones from US Federal Reserve Chairman Jerome Powell would suddenly offer the potential for a surprise rally.
Look at individual values
bank stocks: Gloomy prospects for the major Swiss bank Credit Suisse dragged the entire banking sector down. The European industry index lost around one percent. Deutsche Bank’s stocks were the biggest Dax losers, down 2.6 percent. Credit Suisse shares fell more than 6 percent in Zurich after the bank warned of a second-quarter loss.
SAF Holland: The papers fall by 4.6 percent to 7.71 euros. The Franconian truck supplier is making another attempt to take over the Swedish commercial vehicle brake manufacturer Haldex and is offering 3.21 billion Swedish crowns (equivalent to 307 million euros). “Of course there will be synergies, but the market may not like a cash offer right now,” said one trader. Haldex shares are heading for their biggest gain of the day after a takeover bid by SAF-Holland. You gain around 44 percent to 64.90 Swedish kroner.
Novavax: After the recommendation for approval for the Novavax vaccine by an advisory committee of the US drug regulator FDA, the shares of the pharmaceutical company on the German stock market rose by almost 15 percent. It would be the fourth adult vaccine approved in the United States.
Voestalpine: The Linz-based steel group Voestalpine achieved the best result in the company’s history in the past 2021/22 financial year (as of the end of March) thanks to high demand. The shareholders should therefore receive a significantly increased dividend of EUR 1.20 per share after the last 50 cents: the Voestalpine share climbs by four percent.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.