Investors are acknowledging the brief dip with purchases. Joachim Goldberg knows whether this could pose a threat to the bull market.
Summary
Many professionals reacted to the rapid recovery after the price dip by buying shares, having previously been both short and neutral. The sentiment index for this group jumped by 20 points to +13. Joachim Goldberg assumes that sufficient profits were taken. Private investors moved in the same direction, with a sentiment index of +10 points.
The behavioral economist points out that optimism is at a high level in relative terms, fortunately we cannot speak of extreme values. However, he suspects book profits by older bulls, which could be realized from 18,280/330. On the other hand, the good mood could soon be over again.
24 April 2024. FRANKFURT (Goldberg & Goldberg). Not much has actually happened and the fears that were still reflected in falling share prices and a temporarily poor mood last week may have been exaggerated? You could almost come up with this idea when you consider that the DAX has ultimately gained around 2.1% in value since our last sentiment survey. But, as we all know, hindsight is always wiser. Initially, it was not foreseeable that the geopolitical situation in the Middle East would not escalate immediately. Nor was it to be expected that stock market players would adapt so quickly and easily to the interest rate trend in the USA. In the meantime, hopes of a single interest rate cut this year have diminished in many places; some have perhaps even mentally written off this one step. In any case, the sometimes strong fears from the end of the previous week seem to have faded since Monday.
This is also reflected in the sentiment of the institutional investors with a medium-term trading horizon that we surveyed. Our Börse Frankfurt Sentiment Index has risen by 20 points to a new level of +13. Former pessimists and neutral investors have contributed to this year's highest level of optimism in almost equal measure and are now on the bullish side. Last Monday, there was even comparatively little time to buy into the weakness, so that some players may even have made quite decent profits in the meantime.
Plenty of time to buy
There was a similarly strong change in sentiment among private investors. The Börse Frankfurt Sentiment Index in this panel rose by 19 points to a new level of +10. 8 percentage points of the growth in the bull camp is largely due to previously pessimistic investors who have turned their investments around 180°. Only just over a quarter of the former bears have moved to the sidelines for the time being, presumably to wait and see what happens next.
The bottom line is that, after the risks of further price declines had almost disappeared, there was a clear change in sentiment and some investors were even able to calmly decide to make bullish investments, which in many places have already borne fruit. This applies above all to institutional investors, some of whom entered into bullish positions last week.
Partly well prepared
At least on balance, these bulls have not disappeared. And the Börse Frankfurt Sentiment Index also recorded its highest level this year with today's survey when looking at three and six months in relative terms. Yes, you have to go back to November 2023 to find a similarly high level of optimism.
Overall, optimism for this year is therefore twice as high as the absolute figures currently indicate. Fortunately, however, we cannot yet speak of extreme values. But we suspect that book profits have been made in many places during this week's rally, which will probably be realized for the first time in the 18,280/330 DAX points range, which should at least temporarily put a slight damper on the rise in share prices. This applies equally to institutional and private investors, whose sentiment is similarly good. On the other hand, however, this sentiment could change again very quickly as soon as the current upward momentum of the DAX no longer continues.
24 April 2024, © Goldberg & Goldberg für boerse-frankfurt.de
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