Dax switches back to rally mode – professionals and private investors are under pressure

Dusseldorf The German leading index Dax has made up for its slight losses at the start of the week. The stock market barometer closed on Tuesday up 0.3 percent at 14,442 points.

In morning trading, the Dax reached a new high in its eight-week rally. The highest level in this period is now 14,485 points. However, there were no follow-up purchases as a result, so that the Dax subsequently fell back again with a low trading volume.

However, the most recent development is likely to put many investors under pressure. Since September 28, the index has risen more than 2,600 points at its peak, an increase of over 22 percent. Private investors are now faced with the question: “Should I sell my put products on the leading German index so that the losses don’t get out of hand?”

The Euwax Sentiment of the Stuttgart Stock Exchange, where private investors trade, has fallen to minus 17, the highest value in the past twelve months. Negative values ​​indicate a surplus of put products on the Dax in the depots. With these derivatives, investors rely on falling prices or protect themselves against price losses.

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With rising prices, as they have recently, the losses suffered by holders of these products are increasing. Should they sell these derivatives into the overall rising market, it would further strengthen the rally.

Professional investors are likely to be in a similar situation. Because according to a survey by the Frankfurt Stock Exchange on Wednesday last week, institutional investors have not sold their put options despite significantly higher prices.

For the capital market expert Joachim Goldberg, after evaluating the survey, there was even some evidence that these short sellers “on balance often did not close their positions, but even increased them in some places”. Perhaps the bears are just hesitant to take their accumulated losses.

The reasons may be varied, but the result is clear: These professionals are under considerable pressure if prices do not fall again.

Experienced stockbrokers know: Rising prices and a high proportion of put derivatives in the depots always harbor the chance of a “short squeeze”, a brilliant price increase without any noteworthy news.

Short sellers borrow shares and immediately sell them in the hope of being able to buy them back at a lower price before the redemption date. The difference between the sale and buyback price is the profit that these professionals can only dream of at the moment. In the worst case, they have to chase a rising stock market.

Dax grows faster than US indices

With the price gains on Tuesday, the leading German index has extended its amazing outperformance compared to the US indices. Since the beginning of the month, the Dax has risen by around eight percent. The Dow Jones index, which also has an industrial focus, only managed a plus of three percent during this period, and the Nasdaq 100 technology selection index only increased in value by 2.5 percent.

Over an eight-week period, the Dax is up 22 percent. This rather points to a longer consolidation or even a correction with a minus of at least ten percent. But so far there is little sign of this. The Dax only lost 300 points in the past week, only to reach the all-time high of 14,475 points on Friday.

Only with prices below 14,150 points, the low of the past week, would the technical picture deteriorate in the short term. In the opinion of Jörg Scherer, technical analyst at HSBC Germany, there is a further potential discount of around 300 points below this level.

Bitcoin falls to a new two-year low

In contrast to the stock markets, the Bitcoin price continues to slide. The cryptocurrency hit a two-year low at $15,599. According to data from the Coinmarketcap website, the price then stabilized again above $16,000. So far, there has not been a final sell-off (“sell off”), an indicator of an imminent trend reversal.

The chart technology also gives little hope. Martin Utschneider, technical analyst at private bank Donner & Reuschel, pointed out the importance of the support level at around $17,500 a long time ago. It is now well below that. Now the next technical breakpoints are only at $12,500 and $10,000. Investors should not rule out that a possible final sell-off will drop Bitcoin to four-digit levels for a short time.

Look at individual values

TAG real estate: The group surprisingly canceled the dividend for 2022 and thus alienated its investors. The papers broke almost twelve percent and closed below the mark of six euros.

“Terrible! A company could not send a more negative signal,” commented the analysts at Alpha Securities Trading. The experts from Berenberg canceled the target price to EUR 11.50 from the previous EUR 17.50. The board of directors of the MDax group announced that the company was suspending dividend payments to strengthen reserves.

Thyssen Krupp: The titles react with discounts to a share sale by the activist investor Cevian. The shares of the industrial group fell by 4.3 percent to 5.17 euros. According to the Refinitiv service IFR, Cevian is placing a stake of 3.8 percent. This means that the investor only holds less than one percent of the MDax group.

The Swedish company is offering around 23.4 million shares for sale at a price of EUR 5.15 per note, the Bloomberg news agency reported on Monday evening after the market closed, citing relevant documents. Only institutional investors should be offered the opportunity to buy.

Almost exactly a year ago, Cevian had already almost halved its stake in Thyssen-Krupp. At that time, around 43 million banknotes were for sale. Cevian emphasized that despite the sale, he would remain one of Thyssen-Krupp’s largest investors and want to continue to support the management in its course.

Unipers: With the gas price brake, citizens and companies should also be relieved retrospectively for January and February 2023. The news caused a jump in the price of Uniper shares, which meanwhile climbed by more than 18 percent to EUR 8.11, but then fell back to the original level.

AO World: The titles gained 17 percent. Thanks to the soccer World Cup, the British online electronics retailer announced a profit at the upper end of the targeted range of the equivalent of 23 to 35 million euros for the current financial year. Should the English national team reach the finals, an additional increase in TV sales can be expected.

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

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