Dusseldorf The previous day’s profits will be processed on the German stock market on Thursday. In addition, the major Wall Street indices slipped into the red after significant price gains at the start of trading.
Nevertheless, the leading German index is on the downside. At noon, the Dax is listed at 15,240 meters, a minus of 1.5 percent, around 250 digits less.
Despite the discounts, the index continues to hover in its previous weekly range between 15,509 points on the top and 15,015 points on the bottom. A break out of this trading range is likely to point the way for the new direction on the stock market in the short term. Yesterday, Wednesday, the Frankfurt benchmark ended trading 2.5 percent up at 15,473 points.
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The price slide that began on Friday last week has been constructive so far. In the event of negative news – such as the new Omikron variant or a possibly earlier interest rate hike in the USA – it is sold. If there is no negative news, purchases will be made again – as on Wednesday yesterday.
Such behavior speaks against a correction in the stock market, which would be achieved if the decline was at least ten percent. To put it more concretely: The Dax may fall again towards 15,000 points or even slightly below in the coming days. But a sustainable price slide below the groundbreaking mark of around 14,800 points is becoming more and more unlikely.
The lower limit of the six-month sideways phase from the beginning of April to the beginning of November is in the range of 14,800 meters. According to a technical analysis, a sustained slide in the share price should result in further significant losses.
The survey conducted by the Frankfurt Stock Exchange among medium-term institutional and private investors also supports the thesis that the current stock market phase is only a consolidation in an upward trend – even if this is the largest and at the same time the fastest in this stock market year with a minus of 8.5 percent.
Many investment professionals have sold their short speculations at a profit in the past few days and have switched to the bull side with new long commitments, which, according to sentiment analysis, is a negative sign. Because the new bulls fail on the one hand as buyers and on the other hand they may soon take profits with them.
But according to the behavioral economist Joachim Goldberg, who evaluates the survey, this number of new bulls is not enough to slow down further long-term capital flows into the stock markets. In his opinion, the chances are good that prices will rise again once the volatility in the market has calmed down a bit.
Few private investors have sold their shares
Interestingly, only a few private investors have bought short products, but overall, according to the Frankfurt survey, this investor group sold only a few shares despite the price slide. For the sentiment expert Joachim Goldberg, these were profits that had long been taken mentally, but were not taken in real life. Instead, these book profits have melted away and now, for some people, feel mentally like a loss that they don’t want to realize.
The current result of the American Association of Individual Investors (AAII) sentiment survey also speaks against a further price slide: 26.7 percent bulls are now compared to 42.4 percent – so there is now a clear excess of skeptics among US private investors, which is to be rated as positive, because there are still enough buyers available.
For optimists, yesterday’s trading day already generated a first early buy signal: The Dax closed above the 200-day line, which is mainly observed by long-term investors. This line is currently trading at 15,403 meters.
Look at the individual values
In the course of the upcoming changes in the major European indices in three weeks, three German companies will have to leave the broad Stoxx Europe 600. The software company Teamviewer, the real estate company Grand City Properties as well as the online retailer for house low supplies Zooplus. As of Monday, December 20th, they will no longer be listed in the index.
Teamviewer’s decline follows the sharp fall in share prices in recent months after the company had significantly trimmed its lofty growth ambitions. On Thursday, the rate fell again by almost five percent. Grand City became cheaper by one and a half percent. The Zooplus share, which is to be taken off the stock exchange, fell 0.3 percent.
Chip values fell behind on the stock market. Shares of the chipmaker Infineon Technologies and ASML fell by up to 3.8 percent. According to a media report, Apple told its parts suppliers that demand for the iPhone 13 had slowed.
Thyssen-Krupp: Group boss Martina Merz wants to ensure stable profits again at the group. The time of zero rounds for shareholders is to end. The return to reliable dividend payments is “clearly defined as a goal”. The news leaves the shareholders cold, the share falls by around two percent.
Drought: The shares rise 6.7 percent after an upgrade and are at the top of the MDax. Deutsche Bank raised the valuation of the stocks of the auto supplier and plant manufacturer to “Buy” from “Hold” and raised the price target to 60 from 35 euros previously. On Wednesday, the papers went out of trading at 36.06 euros.
Turkish central bank fails with foreign exchange intervention
The Turkish central bank said it intervened in the foreign exchange market on Wednesday and tried to support the lira. For the foreign exchange analysts at Commerzbank, this has “increased the risk of further critical devaluation”. Ulrich Leuchtmann sums up: “That’s how it works with failed interventions: They only make everything worse”.
Despite the intervention, the Turkish lira is currently again close to record lows against both the dollar and the euro. The current record high from a dollar point of view is 13.8716 lira, for the euro it is 15.6473 lira.
Because the market knows: The net stock of foreign exchange reserves of the Turkish central bank is close to zero. Because of the reported foreign exchange reserves of $ 88 billion prior to the intervention, $ 55 billion belonged to commercial banks. “That leaves $ 33 billion, roughly the trade deficit from January to October,” Leuchtmann calculates.
The central bank could draw on the full gross inventory of $ 88 billion, which would be an accounting ploy. “Because it either has to get back on foreign currency quickly or leave its domestic creditors out in the rain, which exacerbates possible burdens that arise from the weakness of the lira,” says the foreign exchange expert. Now, last Wednesday, a part of “the modest reserve stock was ineffectively squandered”. No wonder that such central bank interventions cannot be successful.
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