Bear market rally: extremes on the stock markets: analysts fear new slumps

Many experts do not trust the current rally on the global stock markets after the unprecedented crash of the stock markets. There are many reasons for that. .

Investors are heavily invested, increasing the risk of a setback

Dusseldorf With regard to the stock market, investors are currently asking three questions: Has the worst survived on the financial markets? Is it time to buy the stocks that sold the most? Or should the recovery be used to make the portfolio crisis-proof for the next low blow?

Sentiment expert Stephan Heibel describes the current mood as “wait and see neutral”. The owner of the analysis house Animusx evaluates the weekly Handelsblatt survey on stock market sentiment, called Dax-Sentiment, among more than 3500 investors.

As long as the facts about the future easing measures and the economic effects do not become clearer, Heibel’s view should not see any major swings in one direction or the other: “Downside potential threatens during the reporting season, because company numbers will become the extent of the economic trend in the coming days and weeks Show damage to the quarantine measures. “

However, the sentiment analysis this week does not provide a clear recommendation to investors’ questions. “Gains in prices such as the opening on today’s trading day are an opportunity to sell one or the other position in the portfolio in order to have enough cash for subsequent purchases in the event of a setback,” says Heibel.

After the panic mood in March followed the bargain hunters, who are currently taking their speculative profits with them. Now the Dax has left its sales level again. If prices continued to rise, individual stocks and sectors would again be overvalued in Heibel’s view.

Among other things, the investment quota is queried in his more extensive Animusx sentiment survey. This rate is already back at a relatively high level. Many investors are already heavily invested again, as the overbought constitution of the US stock barometer S&P 500 shows, which has risen too high too quickly. “This means that the possibility of a continuation of the recovery rally is limited in the short term, the risk of a setback is greater,” explains Heibel. Because if many investors are already heavily invested, few potential buyers remain.

Results of the current survey

Overall, the mood among investors is divided: relief on the one hand that Chancellor Angela Merkel took the direction of “easing” on Wednesday. Disappointment on the other hand about the moderate steps.

This can also be seen from the current results of the Handelsblatt survey Dax-Sentiment. The panicky mood of the previous weeks has evaporated, but nobody can really be happy about the low stock market level. The short-term sentiment is neutral.

Accordingly, complacency is not yet back. Uncertainty remains a dominant feeling among investors, because politicians have only announced action “on sight”. How long will this exceptional situation last? Uncertainty about the answer to this question continues to cause great uncertainty among shareholders.

Investor expectations are also slipping further in the Handelsblatt survey. With a minus of 0.3 the bears dominate over the bulls for the first time since February. Because the hope for a quick end to the measures has been destroyed. Everyone will have to live with the special situation longer than we previously imagined.

Before that, investors hoped for a short shutdown followed by a violent restart including a backlog that should more than compensate for the losses in the second half of the year.

Since this hope has been destroyed, investors no longer want to invest. The willingness to invest has also decreased further. At the end of March, this sub-area of ​​the Dax sentiment reached a historic high of 5.8, since the start of the survey in September 2014, more investors than ever have been invested. Now this value has dropped to just 1.1.

Look at other indicators

The Stuttgart Euwax sentiment, in which private investors trade, has dropped to minus 11.4. That leads to the conclusion: They are buying more hedging products against falling prices again because they fear a second sell-off wave.

The professionals who secure themselves through the Frankfurt derivatives exchange Eurex, on the other hand, are betting on further rising prices. The put-call ratio has dropped to 0.8 and the average is 1.5. Institutionals have bought significantly more calls.

In the weeks before, the hedging positions of investment professionals in the United States were significantly larger than in Germany. But the put-call ratio of the Chicago futures exchange CBOE is currently returning to a normal level.

The investment ratio in US fund manager shares rose only marginally from 27 percent to 29 percent and remains at a historically low level. US private investors remain pessimistic, the bull-bear ratio is minus eight percent.

The “fear and greed indicator” of the US stock markets, calculated on the basis of technical market data, now shows a neutral state of the markets again with 44 percent. Other short-term indicators indicate that a correction in the US equity markets is imminent.

More: Exaggeratedly cheap: Analysts now see these 18 stocks as bargains

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Investors should not run after rising prices

Dax on Tuesday

Private investors do not believe in a sustainable recovery in the stock markets. The institutionalists are braver.


(Photo: Reuters)

Dusseldorf The rising prices on the stock markets also have an impact on the mood of investors: They see the current situation much more relaxed than in the past few weeks. This is shown by the evaluation of the current Handelsblatt survey Dax-Sentiment, in which more than 3,500 investors are interviewed every week.

Despite the price gains and the more relaxed mood, sentiment expert Stephan Heibel remains with his assessment. “With prices going up, investors should continue to sell positions that they would not keep in a sell-off wave,” he says.

Investors should not run after the higher prices either, because the current quotations would reflect a great deal of hope – in his view, too much hope. The new company figures in the coming days and weeks should make valuations more realistic.

For weeks, Heibel has been warning of another setback, a second sell-off wave. Because according to sentiment theory, panic selling behavior is necessary for a floor from which prices can rise again.

At the same time, expectations for the future must collapse and investor optimism will turn into pessimism. “This has not yet been observed, and therefore there can be another wave of sales at any time, which will lead the Dax back to the lows at the end of March,” says the managing director of the analysis company AnimusX. As a reminder: On March 16, the Dax had dropped to 8255 points.

graphic

But optimism about the future is already waning significantly, contrary to the rising prices. According to Heibel, this could enable a second scenario on the markets.

Because if prices rise faster than many investors can take new positions, the price increases are considered unsustainable. Investors then believe in a technical rally, an intermediate recovery in the intact downward trend. Their belief in rising prices continues to fall until the pessimists gain the upper hand.

In this scenario, there would also be a second sell-off wave. “But it is no longer absolutely necessary for the Dax to slide back to the lows from the end of March,” explains Heibel.


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In this case, pessimists could gain the upper hand at a significantly higher course level, which would create a further prerequisite for sustainably rising courses. Why is pessimism so important? Every sustainable rally needs pessimism, because then only a few investors have bought and a lot of capital can still be used. A rally usually runs along a wall of doubt, is called a stock exchange wisdom, which is also an important part of sentiment analysis.

The DAX plus of eleven percent in the past trading week brightened the mood among investors by leaps and bounds. This shows the current evaluation. After the doomsday mood of the past few weeks, the sentiment currently only reaches a value of minus 0.5, which is almost neutral.

The leading German index has lost around 20 percent of its value since the beginning of the year. But that’s no longer the yardstick. Investors are looking to the gradual lifting of quarantine measures.


Have your expectations for the Dax been met in the past week?

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But the survey participants remain unsettled. The value of minus 2.8 when asked whether the expectations for the past trading week have been met remained unchanged despite significant DAX gains. This value usually increases – and with it the complacency of the investors – in parallel with higher share prices.

“Investors apparently missed the recovery in the Dax,” concludes the AnimusX managing director. Even those who got out early didn’t get back in and now have to watch the higher courses.

Future expectations are at 1.0, the lowest level since the outbreak of the corona crisis. The optimism of the past few weeks, when investors still viewed the crash as a cheap buying opportunity, is fading. There are concerns about whether a restart of our economy can really succeed so smoothly.

And these concerns also prevent investors from wanting to take new positions in the next two weeks. Willingness to invest has dropped to 1.7, which is also the lowest level since the outbreak of the corona crisis.


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Institutional investors and private investors show an opposite picture. The investor professionals who trade on the Frankfurt derivatives exchange Eurex are comparatively brave. They sold their hedges against falling prices in the rally last week and are more likely to speculate on further increases in prices.

Private investors, on the other hand, do not believe in a sustainable recovery on the stock markets and use put notes to hedge against a renewed sell-off wave.

In the United States, the hedging positions were also partially released, but there is still a long way to go in the long term on the net. The investment rate among US fund managers remains at a comparatively lower 24 percent.


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US private investors expect prices to fall: the bull / bear ratio stands at minus 15 and indicates a clearly “bearish” mood.

The “fear and greed indicator” of the US stock markets, calculated on the basis of technical market data, only signals moderate fear with a value of 33 percent. After the extreme fluctuations in the past few weeks, in which the value was only slightly above zero, the current situation can almost be described as neutral. Short-term technical indicators suggest an impending price correction for the US stock market.

More: Exaggeratedly cheap: Analysts now see these 18 stocks as bargains

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Dax is heading towards 11,000 points

Dusseldorf The leading German index is currently unstoppable. In the first hour of trading the Dax 1.3 percent increase and is traded at 10,703 points.

The German leading index has risen by more than 2,500 points since mid-March. You can marvel at this rally and believe in a renewed sell-off wave. But the fact is also: According to chart technology, the situation has eased significantly.

According to many technical analysts, the significant price gains in the past are more than just a bear market rally, an intermediate recovery in the intact downward trend, but a sustained upward trend.

“As a result, the DAX should continue to rise, with the area around 11,025 / 11,032 points representing massive resistance,” say the technical analysts at Düsseldorfer Bank HSBC in her morning comment today.

Investor sentiment remains with a critical assessment of the situation. Investors should continue to sell positions that they would not keep in a new sell-off wave, advises Stephan Heibel after evaluating the current Handelsblatt survey Dax-Sentiment. “I wouldn’t run after the courses because the courses now reflect a lot of hope,” he says. Reality should be gradually presented in the coming weeks through company figures.

Positive trading data from China spur the market on Tuesday. Exports shrank in March, but not nearly as much as feared. The People’s Republic had recently relaxed the massive restrictions on public life.

Should China now come with a comparatively small economic loss from the pandemic, that would be positive for the global economy, said Thomas Altmann, portfolio manager at QC Partners.

Hopes of the peak of the coronavirus epidemic hitting Asian equity markets skyrocketed on Tuesday. The Nikkei even rose 2.8 percent.
But the crucial data for future stock market developments come from the United States.

At midday in Central Europe, the US banks JP Morgan and Well Fargo as well as the pharmaceutical and consumer goods manufacturers Johnson & Johnson new business figures. The banks’ prospects in particular are likely to influence the Dax curve.

Because not only the disastrous economic development in the US, but also the key rate cut by the US Federal Reserve is a burden for US banks.

The US standard values ​​started yesterday’s Easter Monday with losses in the new week. But the US futures contracts signal a trade opening at 3:30 p.m. Central European 1.7 percent higher.

Above all, the bank stocks there are benefiting from the economic easing in neighboring Austria. The Bawag– and the Raiffeisen papers increase by more than six percent at the opening of the trade, leading the European banking index. Erste Group’s stocks rose by more than three percent, as did the Austrian selection index ATX.

Look at other asset classes

The euro is rising. In the morning, the common currency was trading at $ 1.0944 after just a little above $ 1.09 last night.
This rise has more to do with the friendly mood on the stock markets than with the Eurogroup’s agreement last Thursday on the corona crisis.

It was a compromise that didn’t make either side happy. The supporters of corona bonds did not because they were not decided. And not the opponents, because they were not excluded in bulk.

“This is how Europe squandered every chance to establish the euro as a” safe haven currency “”, the currency analysts of the Commerzbank.

Oil prices hardly react the decision to cut oil production in the 20 largest industrialized countries.

A barrel (159 liters) of the North Sea type Brent costs $ 32.20, up 1.4 percent. The price of a barrel of American WTI for May rose 0.8 percent to $ 22.60.

Because the weak demand continues. Accordingly, market observers do not expect a sustained recovery in oil prices. According to estimates, the slump in demand as a result of corona virus containment restrictions could reach up to 35 million barrels a day.

Look at the individual values

Eon: The share is one of the few losers in the Dax with a minus of almost two percent. According to traders, they were created by the experts at the US investment bank Goldman Sachs downgraded to “Sell” from “Neutral”.

Wirecard: The paper from the online payment service provider tops the Dax list of winners with a plus of four percent. The share certificate has come comparatively well through the stock market crash. The price has risen by around 25 percent in the past four weeks, since the beginning of the year the minus has been only 0.65 percent.

“When planning wealth, the rule is: never get out completely!”

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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Equity strategy: Investors go bargain hunting in the crisis

Many European companies got under the wheel on the stock exchange. Despite further upheavals, analysts are again seeing exciting buying opportunities. .

Analysts go bargain hunting in the crisis

Gas station of the French oil company Total

Analysts like the company’s comparatively low debt


(Photo: Reuters)

Frankfurt Analysts and investors with strong nerves are already looking for entry opportunities on the stock markets. Even if, in the view of many strategists, the prices should drop even further in the short term, there are already numerous papers in Europe that are considered to be overly cheap.

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Investors are now looking for crisis winners

Frankfurt Stock Exchange

Experts expect the global stock markets to recover in the medium term.


(Photo: dpa)

Frankfurt The stock markets look shaky: after the massive price drop of more than 30 percent, well-respected stock indices like the Dax seem to be fighting to continue the recovery of the past week. But strategists are far from over. Frank Engels, head of fund management at Union Investment, says: “It will remain turbulent for the time being, but we should have already seen the high points in volatility.”

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A final sell-off is still missing for the turnaround in the Dax

The leading German index

Picture from the trading hall of the Deutsche Börse in Frankfurt.


(Photo: dpa)

Dusseldorf It is slowly dawning on investors that the current crash on the stock market is not a technical reaction on the financial market – but a pandemic that will result in far-reaching changes in social, public and economic life.

The more details about the worldwide economic standstill become known, the more optimistic the future for investors. This is shown by the current data from the weekly Handelsblatt survey DaxSentiment among more than 3500 investors.

Three weeks ago, the expectation of Dax development was still 4.1 in three months. Now it has dropped to 1.4. “There are first doubts as to whether we will be able to get out of this crisis halfway in the foreseeable future,” explains sentiment expert Stephan Heibel, who evaluates the survey every week.

Investors’ willingness to invest has also declined accordingly: after a record 5.8 in the previous week, only 3.2 is reached: 40% of the survey participants intended to buy shares within the following two weeks a week ago , now it’s only 29 percent.

However, optimism about the future has not fallen far enough for a turnaround. After all, the stock markets are by definition in a bear market after a decline of more than 20 percent. “Such a bear market does not end when speculators or long-term investors buy,” explains the owner of the Animusx analysis company. “It only ends when nobody sells.”

graphic

That’s an important difference. As long as there are still investors with significant stock positions who now want to sell unwelcome positions after the crash, any countermovement will quickly end. It is not enough that the five-week sentiment average has already reached a negative extreme value and thus signals a turnaround.

For some of these investors, the recovery will never go far enough. They hold on to their positions. However, only until the so-called “final sale”. This is a sell-off wave that must be violent enough for these investors to lose their nerve and throw their last, unpleasant positions on the market. “Only then is a floor reached,” says Heibel.

But it is not that far yet. The crash was too quick, and many investors are hoping for slightly better prices to sell positions. The result: you will suffocate every recovery attempt.

With the weekly DAX Sentiment Survey, investors can closely monitor sentiment developments. According to Heibel’s assessment, future optimism in particular will continue to decline in the coming weeks. More and more investors will lose hope of a quick recovery on the stock markets. And only when the optimism about the future shows extreme negative values ​​in the survey can the “final sell-off” be expected.


In which cycle phase do you think the markets are currently in?

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Until this sellout, the Dax should remain in zigzag mode, sometimes up, sometimes down. “Nerve-wracking. Not nice, ”says the sentiment expert and advises investors:“ Stay with it, sell a little in recuperation to get cash. And buy shares again in the next sale ”.

Heibel had already recommended last Monday: Investors should at least wait for this countermovement in order to then say goodbye to unpleasant stocks in the portfolio at higher prices and thus suffer less loss.

The current results of the survey also show that the panic of the previous weeks has subsided. The short-term mood value of minus 4.2 can be interpreted as fear, but not as panic.

Absolute uncertainty is also diminishing: after minus 12.3 two weeks ago, this indicator only moves to minus 3.6. This decline should not come as a surprise: the fastest and most violent crash in history had never been expected in this form. In the past week there was a countermovement in the Dax with a weekly increase of 7.9 percent. That had reduced the stress level somewhat, at least in the short term.


Have your expectations for the Dax been met in the past week?

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The Euwax sentiment of the Stuttgart stock exchange, which is important for private investors, has fallen back to zero. This means that the number of call and put leverage products in their portfolios is balanced. In the weeks before, the majority of private investors had speculated that prices would rise again.

This indicator also shows that belief in a rapid recovery is diminishing. The optimism that the sharp drop in prices initially created is gradually disappearing. Institutional investors who hedge themselves via the Frankfurt derivatives exchange Eurex are now also neutral.

The situation is very different in the USA. There, the put / call ratio of the Chicago futures exchange CBOE shows strong protection for investors: US fund managers have kept their investment ratio at a historically low level.

The increase in the investment ratio from 11 to 26 percent now looks violent. But since a normal investment rate is 60 to 90 percent, the current value is still low.


Which cycle phase do you expect in three months?

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The bull / bear ratio among US private investors stands at minus 19 percent, the bears dominate the mood. The “fear and greed indicator” of the US stock markets based on technical market data has increased to 24 percent. Although this value still shows extreme fear among investors, it is well above the extreme values ​​at almost zero of the previous weeks.

Other short-term US technical indicators also indicate that the market has fallen too low too quickly, i.e. oversold. The countermovement of the previous week did little to change that.

More: The Dax is hardly worth anything without a dividend

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Financial markets: investors assess risks more precisely

New York Stock Exchange

Wall Street is eagerly awaiting positive signals.

(Photo: imago images / photothek)

Frankfurt A gigantic crash, then a good day every now and then: Economists and investors are increasingly realizing that the corona crisis lasts longer and goes deeper than initially thought. On the other hand, central banks and governments are pouring money into the economy – which raises the question of how much of it actually helps.

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