The current consolidation on the stock market had been announced for a long time.
(Photo: dpa)
Dusseldorf Was the sale last Monday a so-called “cleaning thunderstorm” that paved the way for higher prices again? Probably not. For sentiment expert Stephan Heibel, after evaluating the Handelsblatt survey, Dax Sentiment and other indicators, it is clear: “Investors should remain cautious.”
Even the sell-off a week ago, when the Dax briefly slipped below the 15,000 point mark, did not cause panic among investors. For the sentiment expert, it is therefore still questionable whether all “weak” hands have already been shaken from the market.
According to the sentiment analysis, panic is a contra-indicator because, in a simplified manner, many investors have sold and then a few purchases are enough to drive prices up again. But according to the latest survey, the mood has improved again after the sale on Monday.
What also speaks in favor of weaker prices again soon: Two problems for the stock market have not been solved. On the one hand, high energy prices in Europe, which should also mean rising inflation. On the other hand, higher corona infection rates in some parts of the world, which are causing problems in the supply chains.
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Quarterly figures are also pending. The US consumer goods group Procter & Gamble starts this week on Tuesday, followed a day later by the financial giants Blackrock and JP Morgan Chase. “A whole series of companies will be cautious in formulating their outlook as long as the two problems mentioned do not show any relief,” suspects Heibel, owner of the analysis company AnimusX. He therefore does not expect any new impetus for a resumption of the rally from the reporting season.
The Dax sentiment also offers positive news
Given the negative signs, should investors sell all stocks? “No,” says Heibel. “Anyone who withdraws completely from the market at the moment runs the risk of missing out on a rally that starts at some point.”
Because the Dax sentiment also offers positive news. For example, investors have been optimistic about the future for several weeks. Apparently, many are expecting a year-end rally. Coupled with a high willingness to invest, there is a high probability that further sales can be stopped early. This scenario already prevailed last week, the slide below the 15,000 mark only lasted a few hours.
The five-week sentiment indicator (see graphic) has now also slipped significantly into the red. From this it can be deduced that the current consolidation is not just beginning, but has been going on for several weeks. The graphic also shows: Major trend reversals were always initiated by an extremely negative value. For example, the end of the corona crash at the end of March 2020 or the end of the miserable stock market year 2018 with a minus of more than 18 percent for the leading index. In 2019, the Dax then rose by more than 25 percent.
In the current situation, this indicator does not have to fall to an extreme value in order to herald a year-end rally, for example. Even at the start of the so-called vaccine rally at the beginning of November last year, when the Dax climbed from 11,450 points to 16,030 points, this counter-indicator did not show any extreme value. The positive news: the five-week sentiment is not far from a value like November 2020.
Current survey data
Despite the sell-off last Monday, the German benchmark index was even 50 points up on a weekly basis. Investor sentiment has recovered again: after an extreme drop in sentiment to minus 4.7 a week ago, the indicator rose again to a value of minus 1.7. The high level of uncertainty from the previous week with a value of minus 4.4 has almost disappeared, the indicator has risen to minus 1.3.
The already high optimism for the DAX development in three months has increased again, meanwhile the value of 5.1 has already indicated an extremely optimistic future expectation for three weeks in a row. Even the willingness to invest is picking up, the value rose to 3.4. The last time people were so excited to buy was in November of the previous year.
The Euwax sentiment of the Stuttgart Stock Exchange, on which private investors trade, has come back to a value of two and shows a neutral state of mind. In the private custody accounts, neither call nor put products predominate to a large extent.
Across the Atlantic, the put / call ratio on the Chicago futures exchange CBOE has risen to 0.5, indicating a decline in long speculation. The investment rate of US fund managers rose slightly to 69 percent.
The bull / bear ratio of US private investors indicates a dominance of bears with a value of minus eleven percent. But the figure belies the fact that many bulls as well as many bears have left their respective camps: 38 percent of all investors are currently neutral. The “fear and greed indicator” of the US markets, which is calculated on the basis of technical market data, shows only slight fear with a value of 32 percent.
There are two assumptions behind surveys such as the Dax sentiment with more than 6,000 participants: If many investors are optimistic, they have already invested. Then there are only a few left who could still buy and thus drive prices up. Conversely, if investors are pessimistic, the majority of them have not invested. Then only a few can sell and thus depress prices.
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