Despite the significant losses on Wednesday yesterday, the market is in good shape and continues to offer good prospects for higher prices. At least that’s what Joachim Goldberg thinks after evaluating the sentiment survey of the Frankfurt Stock Exchange yesterday Wednesday afternoon. Both institutional investors and private investors are surveyed.
In his view, investors are currently buying after positive news, not responding to negative news with sales. According to the survey data, there is high demand in the range of 10,100 and 10,200 Dax points, which should initially prevent significant price losses.
Should the German leading index, however, surpass the 11,000 mark, investors would have to run after these price gains. Then the Dax could continue to climb rapidly, possibly leading to a so-called “short squeeze”.
The situation is similar in the United States: There is a high level of pessimism among investors, a classic contraindicator for sentiment analysis. Because – to put it simply – pessimistic investors have already sold and are waiting for a rise. According to experts, this should prevent a significant drop in prices on Wall Street.
The most interesting Dax share is currently Wirecard, which also presented quarterly figures today. According to preliminary figures, the payment service provider increased profit and sales by around a quarter. However, he feels the crisis in the business with flight groups.
The stock remains volatile: after a minus of three percent at the start, the paper turns positive and is currently 0.5 percent higher at € 86. In mid-April 2020, the price was still over 140 euros.
It is currently running apparently for a big showdown: Wirecard against ten hedge funds is the duel. As of Tuesday and Wednesday this week, the funds again increased their speculation on falling share prices.
At least 10.39 percent of the freely tradable Wirecard shares are now in the hands of ten short sellers, according to the latest data from the Federal Gazette last Tuesday. The ratio is extremely high, which is equivalent to 12.83 million shares.
Short seller speculate on falling pricesby borrowing and selling shares in a company from mutual funds, for example. In order to return these shares after the deadline, you have to buy them again beforehand – if possible, of course, at a lower price.
This means that the short sellers will have to buy back a total of 12.83 million shares if everyone wants to close their bets. For comparison: The average daily volume since the beginning of the year is just under 2.4 million papers. However, this value has probably increased due to the involvement of the hedge funds and has amounted to 3.9 million units per day in the past four weeks.
The requirements from overseas are bad: The US stock exchanges continued to slide after the close of trading in Frankfurt. And the indices in Asia are all clearly in the red.
The U.S. Department of Labor released Thursday (2:30 p.m. CEST) the weekly number of new first-time jobless claims. Since mid-March, more than 33 million people in the United States have lost their jobs – more than ever before in such a short time. Experts anticipate a further rise in unemployment in the world’s largest economy due to the ongoing coronavirus pandemic.
The number of initial applications is an important indicator of the short-term development of the US labor market. The US unemployment rate was already 14.7 percent in April. However, due to errors in the data collection, the competent authority warned that the rate should already be around 20 percent.
Look at the individual values
Deutsche Telekom: While all other companies are suffering from the corona crisis, the telecommunications giant from Bonn can increase sales and profits. All this gives the paper an increase of 0.6 percent in a weak market environment. The Telekom share does relatively well in corona times. Since the beginning of the year, paper has only fallen by around seven percent.
RWE: The energy company confirms the earnings forecast and the dividend target for 2020. RWE plans to invest billions in the expansion of green electricity. With a gain of 1.7 percent, the share is one of the few DAX winners on Wednesday. Incidentally, the paper is currently unchanged compared to the price at the beginning of the year.
What the chart technique says
According to the technical analysis of the chart, the Dax is about to set an important course. Does the support zone stop at around 10,300 points?
Because there is a smorgasbord of important support. Among other things, there is the low of December 2018 with 10,279 points, the starting point for the rally until February 2020. And at 10,250 points there is a history low from which the Dax could rise again.
In addition, the 50-day line joins with 10,277 meters. This line is an indicator of the medium-term trend.
There are significant resistances on the top in the area of around 11,000 points. For example, the 50 percent correction in the bear market since February has stood at 11,025 points. Because this mark corresponds to the middle of the downward movement from 13,795 to 8255 counters.
Here is the page with the Dax course, here are the current tops & flops in the Dax. Current short sales by investors can be found in our short sales database.