Yesterday’s trading day was a classic “Inside Day”, Highs and lows were within the range of the previous day. From a short-term perspective, the high and low of the day on Monday of this week are gaining in importance.
Accordingly, prices above around 14,000 points would be a first signal for a renewed attack on last Friday’s record high with 14,132 points. Quotes below 13,807 digits would potentially test the 13,500 point area.
Overall, the consolidation of the German leading index is currently still at a high level. Only at prices below 13,500 points should investors give their first thought to whether the current record hunt for the German benchmark index will come to an end.
Will there be a short-seller attack on Varta in the near future? This provocative question has a first background. Because the so-called short sale rate of the hedge funds, with which they bet on a price decline in the security, has reached a very high value with 9.84 percent of all freely tradable Varta shares. This is shown by the data from the Federal Gazette.
According to data from US financial services provider S3, this rate even amounts to 42.53 percent. However, this speculation has so far been a losing business for the hedge funds.
Because the price development of the Varta share looks positive: The paper is in a sideways trend for several months. On the bottom, there was always a high level of buying interest at around 100 euros. At 138 euros, the upper limit is also the record high that was reached in September 2020. Today, Wednesday, the paper is 0.2 percent in the red at 118.20 euros.
Similar high short sale rates to Varta had recently reached the Lufthansa paper at the height of the corona pandemic in March / April 2020 and the Wirecard title shortly before its crash in June of last year. The comparisons are of course lagging, but the question remains: do the hedge funds know more than other investors? Or will it be the “usual” attack with the accusation of glossed over the balance sheet?
The examples Ströer in April 2016 or Grenke in September of last year, both of which were confronted by shortsellers with the accusation of glossed-over balance sheets, show a similar picture: the share price then quickly slips significantly and it takes a longer period of time for the price to rise again to previous highs.
Short selling means that the funds borrow shares of the company concerned for a fee from banks or other providers. If the price falls as expected, you can buy back the same shares at a lower price and return them to the lender. The difference is the profit. Depending on how many shares you have to buy back, prices can rise as a result. Short sellers, on the other hand, face losses if prices rose unexpectedly before the buyback.
Look at the individual values
Pro Sieben Sat 1: The shares of the television company give more than percent. According to a report by the business news agency Bloomberg yesterday, Tuesday, I wanted to separate the US financial investor and Springer major shareholder KKR from a large part of its stake in Pro Sieben Sat.1 overnight.
Carrefour: Takeover plans allow investors to access the French Carrefour. Shares in Europe’s largest retail group top 11.2 percent after Canadian competitor Alimentation Couche-Tard has shown interest in a takeover.
Reversal in US yields?
US government bond yields are falling again. As recently as yesterday, Tuesday, the value for Treasuries with a term of ten years was 1.1855 percent, the highest value since February 2020. Currently it is only 1.1172 percent.
Despite the decline on Wednesday, investors should be asking themselves the question within a few days, given the rapid rise: Is there a possible trend reversal with sustained increases in returns? Or was it just an intermediate episode that will soon be over?
A new trend with rising bond yields should not leave the stock markets unaffected. The yields on US Treasuries have a guiding role for the financial market as a whole. Further rising yields would speak for a stronger dollar and against further rising share prices, bonds would then be an alternative.
Last week, the value for ten-year government bonds was less than one percent. Such an increase of more than 25 percent within a few days is of course related to the low starting level, but investors should continue to watch carefully.
Because the chart technique answers the question of a trend reversal in US government yields with a clear “yes”. The technical analysts at Bank HSBC pointed this out last Thursday. Your target price for this year is 1.4 percent.
The decisive factor is likely to be how the US central bankers comment on the rising yields. Tomorrow, Thursday, after the stock market closes in Germany, there could be an important clue. Top Federal Reserve Banker Jerome Powell then speaks at Princeton University.
What the Dax chart technology says
What’s the next goal on the top? For the technical analysts at Bank HSBC, the 14,228 point mark is the next point of contact. From a technical chart point of view, a target price of 14,700 meters can be derived in the coming days and weeks.
The calculation behind it: For almost six months, the German benchmark index moved sideways between around 13,500 points (exactly 13,460 points) on the top and 12,300 points on the bottom. Only at the end of October, shortly before the US presidential election, this phase was interrupted for a few trading days when the Dax slipped to 11,450 points. In retrospect, that was the signal for the strong continuation of the rally that followed.
Based on the range of the month-long sideways movement within 1200 points (13,500 minus 12,300), according to technical analysis, the coming trading range can also be estimated. That should have a similar breadth, so the Dax – roughly estimated – fluctuates between 13,500 points on the bottom and 14,700 points on the top.
The brand also provides further guidance: medium-term investors can raise their stop-loss level to 13,500 points.