Professionals and private investors absolutely want falling prices

The Dax now has four consolidation days behind the significant course correction last Friday. Tuesday’s trading range is the culmination of this correction: 12,936 counters on the upside. The situation should only improve if the Dax breaks the 12,936 mark.

Investor sentiment shows one wrong world on the stock exchange. 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. Both institutional investors are now waiting for a significant decline in the German stock market barometer. Because they want to get out of their short speculation 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. And that after an increase of around 60 percent within more than four months.

Should the courses fall, 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,” explains the former currency trader.

There should also be stronger demand if prices continue to rise. Because then the pessimists would have to release their short positions and chase 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. Should the Dax rise above its previous high, one or more short squeezes are quite possible, suddenly rapid price jumps.

“The sentiment environment remains favorable for the Dax,” says Goldberg. The same picture prevails in the USA: The proportion of bulls there has been 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.

Dates today

Today is “Super Thursday” on the US stock exchanges: The four tech heavyweights Amazon, Apple, Facebook and Google present the figures for the second quarter after the market closes.

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 is not well received by the shareholders, the share loses around five 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.

Heidelberg Cement: Billions in depreciation have pushed the building materials company deep into the red. Which complicates the share a minus of almost four 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 their investments in early July due to the deteriorating business prospects caused by the Corona crisis and Brexit.

Nestle: The consequences of the corona crisis slow down the growth of the food giant. Although the Swiss were able to increase their organic sales growth by 2.8 percent in the first half of the year, the pace slowed in the second quarter after a hamster-driven start to the year. Analysts certified Nestle but solid results that exceeded general expectations. The security loses 0.6 percent.

Comdirect: The turmoil in the financial markets caused by the corona crisis has left the coffers of Commerzbank Daughter filled. 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 customer growth within a half-year in more than ten years. However, the titles lose 0.6 percent.

Look at other asset classes

The Turkish lira fell to a new record low against the euro. The new highest market is now at 8.259 lira. For comparison: At the time of the lira crisis in August 2018.

The Turkish currency also continues to fall against the dollar. In early trading, the greenback rose above the seven lira mark and is currently just below it at 6.96. The previous record low against the dollar had reached 7,269 lira on 7 May this year.

This slide may continue significantly in the coming days.

Because 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 currency analyst Tatha Ghose.

Gose now expects Turkey to introduce or strengthen 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.

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 fell to 13,072 points on Thursday, the highest price on 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, Tuesday: The Dax attempted 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.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.