Düsseldorf The German stock market is still looking for new impulses. Falls in the morning the Dax by 0.9 percent to 13,087 points. Yesterday, Wednesday, there was a rather listless trade, although the leading index was ultimately 0.5 percent in the evening at 13,201 points.
A look at the past seven trading days shows: The German leading index suffers from an acute lack of exercise. The total trading range for this period is less than 275 points. The high of 13,277 points is offset by a low of 13,205 points. Only prices outside this range are likely to generate new momentum, which could well be dynamic due to the comparatively long sideways phase with seven trading days.
Investors want to buy shares again. The problem: Not at the current level. This is shown by the current sentiment surveys such as the Handelsblatt-Dax-Sentiment and the Frankfurt Stock Exchange survey of medium-term private and professional investors.
The willingness to add a shovel to the bullish positions at the current level is quite low, says behavioral economist Joachim Goldberg after evaluating the current survey by the Frankfurt Stock Exchange. The mood is overall optimistic, but not yet euphoric, which as a contra-indicator should signal falling prices. Should the prices fall, he expects the first major demand again at 12,700 points.
The survey also shows that the expectations of domestic investment professionals and private investors diverge. The institutional continue to bet on a year-end rally, while some of the private ones have apparently pulled the rip cord and sold shares. “One can assume that some of the respondents have simply lost patience in view of the lack of convincing further price increases in the Dax,” says Goldberg.
The result of the survey Bank of America among international fund managers. The polling period ran from November 6th to 12th, so it includes Joe Biden’s victory in the US presidential election and the announcement of Biontech / Pfizer’s breakthrough in developing a vaccine against Covid-19.
This survey shows: The professionals expect prices to rise significantly. In the past seven months, the cash quota – the proportion of money that can still be invested – has fallen by 1.8 percentage points and has therefore fallen faster than ever. Should expectations continue to rise, that would be a warning signal. The good news for Dax: The international fund managers are only invested to a small extent in shares in the euro zone.
This leads to two conclusions: The fund managers probably left the European stock markets in the second half of October and did not come back. In the second half of October, the Dax slipped by around 15 percent from 13,151 points to 11,450 points.
The other conclusion: for the subsequent November rally up to 13,297 points, domestic investors seem to have taken care of. In view of the generally optimistic attitude of the international fund managers, it should only be a matter of time and of course the price levels when the European stocks will buy again. None of this looks like a stock market crash.
Look at the individual values
Thyssen-Krupp: Investors are sensitive to the industrial group’s new business figures and send the share 6.2 percent into the red. The shares are trading at 4.60 euros, the all-time low of the title from March this year is 3.28 euros.
Without the proceeds that the Ruhr group achieved with the sale of its elevator division, Thyssen-Krupp posted an annual deficit of 5.5 billion euros after taxes in the past year 2019/20, which ended on September 30.
Now the company wants to tighten its austerity program. In addition to the previously planned 6,000 jobs, another 5,000 will be cut in the next three years.
What: The question of why the share price fell by 2.2 percent on yesterday’s trading day was only answered after the market closed: The company is planning a capital increase and wants to issue around 13.1 million new shares and use the money to reduce debt and strengthen its business . Investors continue to sell the paper, the share fell 9.3 percent today, Thursday.
Munich Re: A downgrade by the experts from Societe Generale weighs on the shares of Munich Re, which are falling by around two percent and are therefore the largest in the Dax. The analysts lowered their rating for the paper to “Hold” from “Buy”.
Vonovia: The shares rise 1.6 percent. The experts at the investment bank Jefferies raised their recommendation for the paper to “Buy” from “Hold” and raised the price target by six to 66 euros.
Wacker Neuson: The construction machine manufacturer’s shares are down around nine percent Wacker Neuson. The company loses half of its board of directors: CEO Martin Lehner and CFO Wilfried Trepels leave. Your post will be temporarily taken over by Kurt Helletzgruber, who has previously been on the Supervisory Board. The Munich-based company is suffering from the corona crisis and does not expect to achieve its goals until one or two years later.
Look at other asset classes
In Turkey there is an exciting meeting of the Turkish Central Bank. The new governor Naci Ağbal, who succeeded Murat Uysal at the beginning of November, will chair.
The fact that the markets are generally expecting a major rate hike has caused both the euro and the dollar to fall significantly since the beginning of last week. That continues today, Thursday. The euro fell another 0.5 percent to 9.09 lira.
Experts expect the key interest rate to rise from the current 10.25 percent to around 15 percent. The “worst-case scenario”: Ağbal announces that the central bank does not want to bring inflation back into the single-digit range with monetary policy instruments, but is resorting to restructuring the supply chains for food and energy or price controls. The consequence would be uncontrolled jumps in the lira exchange rate during the further course of the day.
What the chart technique says
In addition to the short-term range of the past seven trading days, the high from September with 13,460 points is important. There is the so-called Corona high, the highest level since the crash in mid-March, when the Dax slipped to 8255 points. Should the barometer break the mark, the record high of 13,795 points will be targeted.
On the downside, strategic stop-loss levels offer some upside gaps as supports. Such gaps arise when the highest level on one trading day is below the lowest level on the following day.
Specifically: The highest level on Friday (November 6th) was 12,596 points, the lowest price on Monday (November 9th) was 12,671 points. As long as the Dax remains above 12,671 points, from a technical point of view there are no doubts about the current rally.