Gold, Silver, and German Stocks Soar to Overbought Levels, Correction Looms
Investors are reveling in short-term euphoria, propelling gold, silver, and German stocks to overbought levels. However, a temporary correction may be imminent, warns Sentix GmbH, which gauges the German stock market's sentiment via its Sentiment Barometer.
The German stock market, notably the DAX, has witnessed a surge in investor optimism, with a 37-point increase in the Sentiment Barometer. This sudden optimism, however, could be a double-edged sword. Historically, similar euphoria phases have often led to below-average returns in the following weeks. Meanwhile, the gold and silver markets are displaying signs of impending consolidation, with overbought conditions and waning strategic basic trust.
In the USA, while a pending consolidation for stocks seems likely, it is expected to occur within an intact upward trend. However, the strategic basic trust of US stock investors is decreasing, despite short-term bullishness, which historically has been a negative signal for the coming weeks. This disparity between short-term mood and medium-term basic trust could potentially trigger a correction, despite US stocks being largely unaffected by political disturbances and seasonal patterns.
With the DAX currently priced at 24,378.80 points on XETRA, investors should prepare for a potential temporary correction, despite the recent euphoria. While the US market is expected to consolidate within an upward trend, investors there should also be cognizant of the decreasing strategic basic trust.
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