FRANKFURT (DEUTSCHE-BOERSE AG) - The pendulum swing near record highs is attracting many professionals to the short side. Joachim Goldberg knows what this could mean for share prices.
June 12, 2025. FRANKFURT (Goldberg & Goldberg). For the first time in nine weeks, the DAX has posted a loss – we are talking about one percent week-on-week since our last sentiment survey. However, it had previously reached a new all-time high slightly above the target zone we had last announced. Since then, prices have fallen slightly, although it is questionable whether the latest news from the US – which is still dominating the headlines here – contributed to this setback.
Of course, the agreement on a preliminary plan to reduce trade tensions between the US and China could even be interpreted as positive for the financial markets, but since no concrete details were available at the time of today's survey, it is not surprising stock market traders in many places responded to the announced success of the talks in London with a shrug of the shoulders. Perhaps this is because, according to some commentators, many players are said to have a strange feeling in their stomachs, which could also be described as a subliminal fear, given the strong stock markets on both sides of the Atlantic and the predominantly negative news flow from the US.
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Fear or reward?
Now, our latest sentiment survey among institutional investors with a medium-term trading horizon shows that, at least for a large proportion of those surveyed, their gut feelings have been "communicating" with their heads during the past few trading days, to put it bluntly. In some places, fear may have risen from the gut to the brain. At least, the mood, as measured by our Frankfurt Stock Exchange Sentiment Index, has deteriorated significantly compared to the previous week, falling by 21 points to a new level of -15. At the same time, the bear camp has increased by 15 percentage points. This increase is made up of 60 percent formerly neutral investors and 40 percent former optimists who have turned their position 180 degrees to "bearish."
However, it is by no means certain that the new commitments are merely fear-driven positions. After all, the very real possibility of selling near last week's all-time high and the prospect of activating the reward system in the brain could also have motivated this decision, to stay with the metaphor.
Contrasting private investors
The mood among private investors, on the other hand, remains almost unchanged. At least on the surface, our Frankfurt Stock Exchange Sentiment Index has only fallen by one point to a new level of +13 in this panel. But this apparent passivity is only apparent at first glance. In fact, a clear discrepancy has emerged between those surveyed via social media and the other investors – the highest difference since the separate survey began in June 2023. While the former are significantly more positive thansignificantly more positive than in the previous week, the remaining private investors, like institutional investors, have moved significantly toward the bear camp; in the end, both movements balanced each other out.
The bottom line is that the mood gap between private and institutional investors has widened compared with the previous week. However, if we exclude private investors surveyed via social media, the mood in both panels is almost the same, but not extremely bad.
Regardless of whether the most recent short positions (especially among institutional investors) were taken out of fear or simply to generate extra performance from a setback, the latest sentiment development should be seen as support for the DAX. should the stock market barometer come under more significant pressure. We expect initial good demand in this case in the 23,610/60 range.
The situation on the upside is also interesting if the fears prove to be unfounded, especially if fresh long-term demand, particularly from abroad, pushes the DAX back up again. In that case, it would not be surprising if the next run on the all-time highs were fueled by hasty buybacks by today's pessimists. A short squeeze should come as no surprise in this context.
by Joachim Goldberg
June 12, 2025, © Goldberg & Goldberg for boerse-frankfurt.de
(Deutsche Borse AG is solely responsible for the content of this column. The articles do not constitute an invitation to buy or sell securities or other assets.)
