Dax stays above the 15,000 point mark – will the expiry date usher in a trend reversal?

Since Thursday last week, the German benchmark index has been moving sideways in a range of around 250 points – the limits are 15,012 points on the bottom and 15,279 points on the top. Recently, trading days were rather quiet and there was no sign of another sell-off. And there are no signs of a crash anyway.

There are also hardly any major fluctuations to be expected until the end of the week. Until then, investors should keep an eye on the current Dax upper side, i.e. the 15,300 point mark.

Because on Friday is a so-called small expiry day on the stock exchange, on which options on indices and individual stocks expire and are settled. In the run-up to such expiration dates, investors usually try to move the prices of the securities on which they hold derivatives in a direction that is favorable to them.

It is therefore important for investors to know at which price brands the largest outstanding volumes of the options can be found. The situation on Friday of this week is unusually clear: it is by far a put option, also known as a put option, on the underlying Dax at a price of 15,300 points.

Anyone who has secured this put option can (but does not have to) sell a fixed amount of the base value at the fixed price, the exercise price, on Friday – in this case the equivalent of 15,300 Dax points. If the leading index is above 15,300 points on the expiry date, the option is “out of the money”, it expires and is worthless.

The owners of this option therefore want to see the settlement rate below this mark. The sellers of this put option, called writers in technical jargon, see it differently. Every point on Friday lunchtime below the settlement rate of 15,300 points costs them money.

These sellers are mostly banks or institutional investors who hold the base value of the option in their own custody account. They could have played a role on Wednesday last week when the Dax slipped to 14,818 points, but then quickly recovered. Potential losses by the writer were thus limited again.

Why is the look important? You only have to look back a month to see the importance of expiration days on the German stock market. The expiry date in September ushered in a trend reversal: On September 16, the leading index fell significantly from 15,791 points. The following Monday was followed by a sell-off, a price slide with a high trading volume, which in the meantime dropped the Dax to 15,012 points.

Even if the expiry day in September was a big one, a so-called witch’s sabbath with a significantly higher impact on the overall market: Investors shouldn’t underestimate the impact of expiration dates. It doesn’t always have to go downhill after such important appointments. The coming Friday could also be the surprising starting signal for a year-end rally.

Look at the individual values

Delivery Hero: Just Eat Takeaway.com’s disappointed order numbers left their mark on industry stocks. The titles of the food delivery service fell on the Amsterdam Stock Exchange by up to 5.8 percent to 61.22 euros, marking their lowest level in a year and a half. Since the beginning of the year, the shares have lost almost 30 percent of their value. Most recently, the papers were 1.7 percent in the red.

The shares of the competitor Delivery Hero lost 3.6 percent at times in the Dax, but were again 1.5 percent up at the end of trading. The share has already lost more than 16 percent in the past few weeks. The papers of the British competitor Deliveroo gave way to 0.6 percent.

Orders in the third quarter at Just Eat fell short of expectations with an increase of 25 percent. While delivery service grew 51 percent in its largest market, Great Britain, the United States, its second largest market, grew by just 3 percent.

Fraport: Passenger numbers at Frankfurt Airport continued to recover in September. Germany’s largest airport counted around 3.1 million passengers, an increase of 169 percent compared to the month of the previous year, which was badly affected by the corona crisis. As in August, almost half of the pre-crisis level had been reached. However, the share closed unchanged.

SAP: One of the biggest DAX winners were the shares of the Walldorf group, which rose by just under four percent after another forecast increase. A year ago, SAP shocked shareholders with a sharp cut in its forecast, but since then the software manufacturer has regularly exceeded its targets: On Tuesday, after a strong third quarter, it announced better figures for the entire fiscal year – for the third time this year.

LVMH: An increase in sales in the quarter also pushed LVMH stocks. The shares of the French luxury brand manufacturer climbed 3.8 percent in Paris.

Short-term interest rates rise significantly

The two big issues on the stock markets are interest rates and inflation. The higher inflation rates are increasingly reflected in the forecasts for the development of key interest rates. Meanwhile, a first interest rate hike by the ECB at the end of 2022 is already consensus among analysts.

That expectation is now being priced into the bond markets. Since the central banks have more control over the short end of the yield curve with their key interest rates, the effects there are particularly great. The yield on five-year Bunds reached on Wednesday with meanwhile minus 0.461 percent, the highest level since April of last year.

The yield curve shows the relationship between different interest rates based on their term. In the USA, too, this curve has already flattened significantly. This is reducing the profitability of the big banks – and depressing their share prices. Deutsche Bank was at the bottom of the Dax with a loss of 4.3 percent on Wednesday. JP Morgan’s stock also lost 2.6 percent despite strong quarterly results.

Profitability suffers from this in particular

Dollar reached new record high against the Turkish lira

The Turkish lira continued its downward trend and hit a new record low against the dollar at 9.1047 lira. In return, the greenback rose above the nine lira mark for the first time yesterday, Tuesday, and was quoted at 9.1047 lira on Wednesday. The euro has not yet made it. With a daily high of 10.5315 lira, the common currency is just below the previous high of 10.6306 lira.

The reason for the movements: The Turkish one President Recep Tayyip Erdogan has hinted at a possible military offensive in neighboring Syria.

The lira has weakened more than six percent against the dollar since the governor of Turkey’s central bank focused on a narrower range of core prices last month.

In addition, central bank chief Sahap Kavcioglu is apparently himself under criticism. After Erdogan’s dismissal of three Turkish central bank chiefs within two and a half years, things are apparently getting tight for him too. The head of state had lost confidence in Kavcioglu, the Reuters news agency learned last Friday.

What the Dax chart technology says

The importance of the Dax mark of 15,000 points is obvious. After the break of this core support and the 200-day line, which is important for long-term investors and currently stands at 15,052 points, there was a sell-off last week followed by a comeback. The low from May at 14,816 points was also tested.

As long as the Dax stays above the 15,000 mark, nothing burns from a technical point of view. A renewed break in support could, however, herald troubled trading days.

On the upside, the April high (15,501 points) remains in focus in conjunction with the downward price gap from September 28th. Such gaps arise when the highest level of a trading day is below the lowest level of the previous day. They are considered a sign of weakness. As long as this gap is open, i.e. the Dax does not reach 15,552 points, the technical situation remains tense.

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