Professionals and private investors absolutely want falling prices

Düsseldorf The German stock market ended its summer break prematurely after days with only slight price fluctuations. He closed 3.45 percent or 443 points on Thursday at 12,379 points. In the meantime, he had even quoted more than 500 meters below the previous day’s level.

The situation in the USA is even worse: The US economy suffered an unprecedented economic downturn in the corona crisis. Gross domestic product (GDP) declined by 32.9 percent over the year in the second quarter.

In addition, initial jobless claims remain high. The latest figure for the week up to and including July 25 is 1.434 million.

Investor sentiment shows one wrong world on the stock exchange, if you look at the longer price trend. The leading German index has risen by almost 60 percent since mid-March, which is actually a reason for the party mood among investors. But there is record-breaking pessimism.

This is shown by the current results of the investor survey conducted by the Frankfurt Stock Exchange. This pessimism has never been so high since the beginning of the survey in early 2013. The institutional investors are now waiting for a significant decline in the German stock market barometer. Because they want to get out of their short speculations with as little loss as possible.

“In order to be profitable or to minimize book losses, the majority of the stock marketers we surveyed need preferably negative surprises and the associated drop in share prices, ”says behavioral economist Joachim Goldberg after evaluating the survey.

According to this survey, the first large purchases between 12,300 and 12,400 meters could be made. “A circumstance that should benefit the Dax at a lower level,” explained the former currency trader on Wednesday evening. Now the Dax has already reached this level.

There should also be stronger demand if prices should rise again. Because then the pessimists would have to release their short positions and run after the higher prices.

Two brands are in focus: firstly, the June high with 13,314 points and above that the record high with 13,795 points. If the Dax rises above its previous high, one or more short squeezes are quite possible – suddenly sudden price jumps.

“The sentiment environment remains favorable for the Dax,” says Goldberg. The same picture also prevails in the USA: the proportion of bulls there is at its lowest level since 2016. If the stock exchange rules still apply that a bull market dies only in euphoria, the price gains should continue soon.

Important impulses for tomorrow’s trading are likely to come this evening after the market closes in the USA: On “Super Thursday”, the four tech heavyweights are on the move Amazon, Apple, Facebook and Google after close of trading the figures for the second quarter.

Two figures show what this means for the US stock exchanges and thus the financial markets: The total market capitalization of the four groups is around $ 4.8 trillion, which is 18 percent of the leading index S&P 500.

Look at the individual values

Volkswagen: The corporation will pay less dividends for 2019 than originally planned due to the corona crisis. In order to conserve their own cash register, only two more are to be distributed to shareholders instead of the approximately three billion euros announced in February. This was not well received by the shareholders, the share lost almost seven percent.

The corona crisis has that VWCorporation hit hard. In the first half of the year, Volkswagen slipped into the loss zone in terms of operating profit. Minus 800 million euros are now on the books.

Airbus: Of the Boeing– According to analysts, Rivale benefits from a lower cash outflow and lower restructuring costs than expected. The quarterly loss was also higher than predicted. The stocks listed in the MDax rose 1.9 percent.

Heidelberg Cement: Billions in depreciation have pushed the building materials company deep into the red. This has brought the share down by around six percent.

The bottom line was a loss of three billion euros in the second quarter. Heidelberg Cement had already written down 3.4 billion euros on the value of its investments in early July due to the deteriorating business prospects caused by the corona crisis and Brexit.

Fresenius: The enterprise has to correct its targets for the current year due to the corona crisis, which caused a minus of more than six percent in the share. In the second quarter, the consequences of the pandemic were fully reflected in the health company’s business. As the clinic operator kept many beds free for corona patients and fewer other operations took place, the subsidiary Kabi, which specializes in liquid medicine, anesthetics and clinical nutrition, was slowed down.

Freenet: A positive analyst comment put the shares at the top of the MDax. The paper of the mobile phone provider increased more than five percent. The analysts at Berenberg Bank upgraded the title to “buy” from “hold” and raised the target price to 18 from 16.50 euros.

Comdirect: The turmoil on the financial markets caused by the corona crisis filled the coffers of the Commerzbank subsidiary. The profit before taxes could Comdirect almost quadruple. In the first six months of 2020, there were not only many trades, but also the largest increase in the number of customers within a half year in more than ten years. But the titles lost 1.6 percent.

Siltronic: The chip supplier suffered from a weak outlook for the second half of the year. The Munich-based company sank by up to ten percent after the manufacturer of silicon wafers from which chips are punched announced a weaker second half of the year.

Look at other asset classes

The Turkish lira fell to a new record low against the euro. The new high is now at 8.259 lira. For comparison: At the time of the lira crisis in August 2018, the value was 8.21 lira.

The Turkish currency also fell further against the dollar. In early trading, the greenback rose above the seven lira mark, at close of trading it was just below the value of 6.98. The previous record low against the dollar had reached 7.269 lira on May 7 this year.

This slide may continue significantly in the coming days. From mid-June to the end of July, the dollar-lira exchange rate, without major volatility, was stuck in the region just above 6.85 – despite significant central bank rate cuts, high inflation and the resulting negative real interest rates, unchanged current account deficit and a fundamentally poor economic outlook. The government wanted it to stay that way. Which means: Apparently the Turkish central bank intervened.

The so-called foreign exchange market interventions, according to calculations by bankers and analysts, have totaled around $ 110 billion since the beginning of last year, and have partially used up the central bank’s foreign exchange reserve buffer. In turn, the central bank’s gross foreign exchange reserves have decreased from $ 81 billion this year to $ 49 billion.

However, the situation eased somewhat in the short term because the Turkish central bank has raised its inflation forecast. The new forecast reduces the likelihood that the central bank will cut interest rates further. “This new restrictive development supports the Lira at least slightly, even if it will not be able to reverse the current price development,” says Commerzbank-Devisenanalyst Tatha Ghose.

Ghose now expects Turkey to introduce or tighten various capital controls to prevent this slide, at least in the short term. With the risk that such measures can no longer contain the exchange rate movement, which in turn could lead to even more violent price jumps.

The weak US data also gave the euro a real boost. The common currency rose temporarily from $ 1.173 to $ 1.180, the highest level since September 2018. In early July, the euro had still cost around $ 1.12 and in May was even at $ 1.07.

The price of gold at yesterday’s record was yesterday at 25 cents failed from $ 1980.56. After this attempt, the price per troy ounce (31.1 grams) slipped somewhat again on Thursday.

The Fed’s opinion does not hinder rising gold prices. She doesn’t even think about raising interest rates, according to chairman Jerome Powell. This illustrates how far interest rate hikes are away. “The Fed will therefore continue to be in demand as a fight against the crisis; nothing will change in the foreseeable future regarding ultra-relaxed monetary policy. This fact speaks for a further rise in the gold price, ”say Commerzbank’s commodity analysts.

Die US-Bank Goldman Sachs As one of the drivers of the gold price, investors have become increasingly concerned that the dollar may lose its leading role as a global reserve currency. Commodity expert Jeffrey Currie and his colleagues believe that gold is the last currency that is still valid when everyone else fails.

What the chart technique says

Obviously last Friday’s gap in the course stands in the way of the Dax. Such a downward price gap occurs when the previous day’s lowest level is above the highest price on the following trading day.

Specifically, the Dax dropped to 13,072 points last Thursday, the highest price on the following Friday was 12,935 points. A downward price gap of this type is considered resistance according to the chart technique. And this resistance was confirmed yesterday: The Dax started trying to close this gap, but the daily high was 12,936 points.

Should the gap be closed, the next resistance would be at 13,314 points. It has been the previous high since the Corona crash in mid-March, which was achieved on Tuesday last week. The Dax record mark from February of this year is already 481 points above the Corona high, when the leading index reached the highest level ever with 13,795 points.

Support on the bottom is provided by the average lines of the past 50 and 200 trading days, which are at 12,364 and 12,209 points.

According to the HSBC-Chart technician, this area is predestined for a strategic stop-loss brand. In other words: Quotations in this area would also be an entry opportunity with a correspondingly good chance-risk ratio – especially since the current 200-week line is 12,105 points.

Here is the page with the Dax Course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

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