The Dax developed a stable upward trend in October.
(Photo: dpa)
Dusseldorf There is currently nothing to prevent a year-end rally on the German stock market. That is the result of the Handelsblatt survey Dax Sentiment among more than 6000 private investors.
“Seldom have I measured such a balanced, positive mood,” says sentiment expert Stephan Heibel, commenting on the results of the survey. “Yes, optimism prevails and investors are in a good mood. But there is no talk of exuberance and a dangerous mismatch between the sentiment and the current market situation. “
If investors were too positive, that would be a counter-indicator: If many investors are optimistic, they have already invested and there are only a few buyers left. That is why euphoria on the stock market is considered dangerous and a signal for falling prices.
But investors are far from euphoria: The sentiment remains unchanged at 2.8 – euphoria is only spoken of when values are above four. “The moderately good mood is definitely appropriate with the rising prices,” says Heibel.
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The five-week average also shows rising prices: it rises from minus 1.7 to plus 1.4. The decisive factor here is that the five-week average two weeks ago reached a bottom at minus 9.3 and is now rising.
In the past, this constellation was often an indication of rising prices. Basically, the following applies: the deeper the value falls, the longer the rally can last. The moderate value of 1.4 indicates that the rally is not over yet.
Dax in stable uptrend
In October, the leading German index, the Dax, rose by 2.8 percent. It developed a stable upward trend: four times in a row there were higher highs and lows in a weekly comparison.
Intermittent setbacks ensured that the market did not run too hot: at the beginning of October the Frankfurt stock market barometer briefly fell below the 15,000 point mark and below the level of 15,500 points at the end of the month. Heibel had recently forecast such a scenario.
In the past week, market expectations were fulfilled for more than two thirds of the survey participants, but not for almost a third either. This reduces complacency from 2.2 to 1.2.
“Because of the repeated setbacks, unsafe hands are shaken out of the market,” explains Heibel. “Investors who only speculate and are not fundamentally convinced of the stocks in their portfolio panic quickly when prices fall and sell their positions. The capital that is freed up as a result can then fuel the next rally. ”In addition, the investment rate of the survey participants shows a now optimistic, but not yet excessive positioning.
The setbacks also affect the expectations of investors: Optimism falls to 3.5 – two weeks ago this value was 5.2. “The euphoria that we saw at the beginning of October at the beginning of the rally has turned into moderate optimism,” Heibel concludes.
This fits in with the development of the Euwax sentiment of the Stuttgart Stock Exchange, in which private investors trade. The sentiment has fallen to a value of minus five. So there are more short investments that investors can use to hedge their book profits than long speculation – i.e. bets on rising prices.
The comparatively high willingness of investors to invest is also important. It rose from 2.7 the previous week to 3.7. That is the second highest value of the year. “In the eyes of many investors, now is the right time to add stocks to their portfolio,” says Heibel.
Moderately positive self-satisfaction and optimism with a high willingness to invest: This speaks in favor of a further rise in prices. “In my opinion, the current mood is a healthy starting point for further price increases,” says Heibel. “As a target price, a lot of investors have noted the all-time high in the Dax from August.”
On the way to the Dax record of 16,030 points, there are likely to continue to be small setbacks in which the market draws air for the next upward jump. On the downside, investors have raised their post-purchase mark to 15,200 points, after 14,800 points in the previous week.
This brand harmonises well with the investor survey conducted by Deutsche Börse in the middle of last week. There sentiment expert Joachim Goldberg concluded from the result that institutional investors could increase their commitments in the range from 15,150 to 15,200 points.
US investor sentiment
US investors are currently significantly more “bullish” than German investors. While short investments predominate among German investors, there is increased interest in call options in the USA, which are used to speculate on rising prices.
The bull and bear quota for private investors is ten percent. The proportion of optimists is ten percentage points higher than that of pessimists. Compared to the previous week, however, some investors have left the camp and moved to the camp of the neutrals or even the camp of the pessimists.
Meanwhile, the US fund managers have increased their investment quota to 103 percent. Two weeks ago this value was 63 percent. A value of over 100 indicates that the conservatively positioned US fund investors are speculating on credit (i.e. leveraged) on rising prices. The technical “fear and greed indicator” of the leading index S&P 500 already shows greed with a value of 72, from 75 one speaks of extreme greed.
Other asset classes
Oil: The oil price was unable to continue its rally in the past week. The North Sea variety Brent fell by more than one percent on a weekly basis. As a result, the euphoria that had recently prevailed on the oil market has evaporated, and optimism about the future has fallen significantly. “Now the bears are dominating the oil field. If there is still a party while dark clouds are forming in the sky in the future, the oil price is about to fall, ”predicts Heibel.
Bitcoin: The oldest and most important cryptocurrency is currently hovering around the $ 60,000 level. The rally that drove the digital currency to $ 66,930 in mid-October has ended. “Bitcoin is now consolidating slightly,” observes Heibel. “Accordingly, the mood has returned moderately.”
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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