Dax: Extreme pessimistic mood

In contrast to the US indices, which reached new all-time highs yesterday (S&P 500 for the first time above 3000 points), the Dax currently shows a conspicuous weakness and has now suffered losses for four consecutive trading days. What’s going on? The Dax and the S&P 500 have been drifting significantly apart over the last few days:

According to the latest survey by Deutsche Börse, the mood of DAX investors is currently extremely pessimistic! Compared to the previous week the proportion of bulls among professional investors has fallen by -15% to only 27%, while the bears have gained 16% to 46%.

The picture is similar for private investors: here the bulls lose -7% to the previous week to only 33%, the bears gain +12% to now 45%.

Do the well-disposed investors believe that everything good has already been priced into the Dax? Joachim Goldberg’s assessment:

“So today’s survey shows that both private and institutional investors have taken the precaution of taking the Bear side. This is why the 1.4 percent fall in the DAX price compared with the previous week is largely attributable to these activities. While it is true that today’s hedges and sales were not made in fear of a major price slump, the risks of a downward correction appear to be more threatening to the players than the opportunities for a stronger rally encourage them to do so”.

“Therefore we expect the sellers of the past few days again to be demanders at a lower level (possibly between 12,250 and 12,200 DAX points), but not before tomorrow’s trading day. Should today’s precautionary measures prove to be unnecessary and the DAX does not get into trouble as the majority had hoped, the bears would quickly lose out and the market would have to deal with another short squeeze and a possibly juicy DAX rally in the context of urgent buybacks. The pessimism of institutional investors in particular is already quite extreme, both in absolute and relative terms”.

Will the Dax soon narrow the gap to the US indices with a short squeeze? We will see – but the potential for this is still there, given the general pessimism of the Dax investors.

Finally, the assessment of Joachim Goldberg’s data (german):

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