Market sentiment: "Trust in the slow lane"

This week, private investors in particular were active, price-driven, as Joachim Goldberg suspects. So real impetus continues to be in short supply?

24 August 2023. FRANKFURT (Goldberg & Goldberg).?If you look at the percentage change in the DAX compared with our last sentiment survey, you might think that trading on the stock markets is in the much-quoted summer slump. After all, a weekly loss of the stock market barometer of 0.1 percent is minimal in itself and even the four-week point comparison of -2.5 percent does not look dramatic. However, the DAX has at times lost up to 6.4 percent since the beginning of the month.

So not everything has been in butter after all, if one reviews, for example, the economic development in China alone during the past two weeks, which has been viewed with a great deal of suspicion by commentators. But the upcoming meeting of central bankers in Jackson Hole has already caused some unrest, as the "Fed whisperer" of the Wall Street Journal, Nick Timiraos, drew attention to himself on Monday with his article on the possible end of the era of historically low interest rates.

Only a few dare

Nevertheless, the sentiment among the institutional investors with a medium-term trading horizon surveyed by us has improved slightly compared to the previous week. This is because our B?rse Frankfurt Sentiment Index rose by 3 points to a new level of -11. There was virtually no change in the relative pessimistic majority of respondents (44 percent): The new positive voices all came from previously neutral-minded players, with the bull camp growing by 3 percentage points.

In contrast, the change in sentiment among private investors is more pronounced. In this panel, our B?rse Frankfurt Sentiment Index improved by 12 points to a new level of -8. Behind this change in sentiment is a clear turnaround of 6 percent of all respondents who have moved from the bear side directly to the bull side. Obviously, at least some of the pessimists have managed to get out of earlier bearish engagements during the interim price loss of the DAX of slightly more than 2 percent since last Wednesday without performance problems.

Price is the deciding factor

Today's survey has narrowed the previous gap in sentiment between private and institutional investors. At the same time, however, it is becoming clear that the comparatively favorable entry prices rather than macroeconomic motives were probably more decisive for the recent bullish engagements - especially among private investors. Institutional investors, on the other hand, are still showing caution, so that one can at best speak of a creeping return of lost confidence. In fact - and even the slightly positive sentiment values on a three- and six-month horizon do not change this much - the overall market opinion is not bullish, but only slightly less bearish than before.

For the DAX, the situation has thus not really improved, especially since the recent recovery from the interim low of 15,469 points is probably home-made. After all, there is still enough demand if the stock market barometer were to dip into this price range again.

24 August?2023, ? Goldberg & Goldberg für boerse-frankfurt.de