Market sentiment: "Unbroken staying Power"

3 September 2024. FRANKFURT (Goldberg & Goldberg). Three new all-time highs since our last sentiment survey - you could be forgiven for thinking that the DAX was on a steep upward trend. However, the new record highs are only marginally apart and the difference compared to the maximum in May was not even 100 points at the end. Not to mention the fact that the next “round” level of 19,000 points could not be overcome. In other words, there was no buying panic at the all-time high.

Of course, one could argue that the sluggish trading was due to the US holiday last Monday. At the very least, the complete presence of the US markets after the long weekend resulted in something of a déjà vu, reminiscent of the beginning of August, when the stock market barometer in this country lost 8% of its value at times within three trading days. At the beginning of the new month, the DAX also fell by 2.4% at times, presumably not without the influence of the US stock indices, up to the time of today's survey, i.e. within around 24 hours.

With a steady hand

Meanwhile, the institutional investors we surveyed with a medium-term trading horizon appear to have essentially maintained their basic position of the previous week, at least on balance. Our Börse Frankfurt Sentiment Index only moved by one point to a new level of -11. However, the polarization between bulls and bears has increased. The group of neutral investors has fallen by 7 percentage points - just over half of them have switched to the bulls. This means that their group has increased by 4 percentage points and that of the bears by 3 percentage points. While the latter (must) continue to bet on a significant correction in the DAX and have already been under water with their positions for several weeks, the new bulls have presumably bet on a continuation of the upward trend from the previous month.

In contrast to their institutional counterparts, sentiment among private investors has deteriorated slightly compared to the previous week - our Börse Frankfurt Sentiment Index has fallen for the second time in a row, currently by 5 points to a new level of +4. In the end, a small group of former optimists (just over 2% of all respondents) have sold their investments and moved almost entirely to the bear side. Even though the sentiment among private investors surveyed via social media has deteriorated somewhat, they remain significantly more confident than the other investors; the gap between these two subgroups has hardly changed.

The secret hope of déjà vu

On balance, the sentiment gap between private and institutional investors has narrowed slightly compared to the previous week. As far as institutional investors are concerned, the proportion of those with a neutral opinion has now almost returned to the level of two weeks ago and stands at 25% of all respondents. During the same period, there has been a small shift from the bulls to the bears. The latter are in the majority and are also likely to set the tone for the coming market events. On the one hand, because the majority of them are still waiting for a setback that goes back to around the 18,360/410 area, where we expect to see significant demand for the first time. However, this level could only possibly provide some support for the DAX, because in the event of long-term capital outflows (primarily from abroad), these are likely to be stronger than domestic demand. On the other hand, above 19,000 points, little resistance would be expected if the stock market barometer were to regain strength, especially as today's bears would provide additional demand with possible stop-loss purchases. Despite another weak start to the month for the DAX, all is not lost - at least the sentiment situation has not deteriorated. 

By Joachim Goldberg

3 September 2024, © Goldberg & Goldberg für boerse-frankfurt.de

The Börse Frankfurt Sentiment Index ranges between -100 (total pessimism) and +100 (total optimism), with the transition from positive to negative values marking the neutral line.  

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