Dusseldorf The rally on the German stock market surprised many investors. While they had expected falling prices, the leading index Dax rose by almost three percent from the week’s low on Monday to Friday evening. However, this did not cause a change in mood, as the result of the weekly Handelsblatt survey Dax sentiment shows.
More than 8,000 private investors are surveyed. Stephan Heibel, Managing Director of the analysis company AnimusX, evaluates the answers and supplements them with further indicators, resulting in a broad picture of the mood.
This week shows that investor sentiment (sentiment) has improved, but despite prices close to the record high, it does not get beyond the neutral zone: The associated value rose from minus 3.3 points to plus 0.1.
Around half of those surveyed see the Dax currently in a sideways movement, another fifth observes a top formation for the Dax – i.e. the end phase of an upward trend. Only 14 percent place the Dax within such an intact upward trend.
And according to the opinion of the survey participants, there is no improvement in sight, as their future expectations show. Only one in five expects the Dax to be on an upward trend in five months. Almost half, on the other hand, expect prices to fall, and almost a third believe in sideways movement.
The willingness to invest, on the other hand, remains moderate at 0.7. It shows the current dilemma of most investors, explains Heibel: “Actually, people were waiting for significantly lower prices, at which they would have liked to get involved. Investors are now unsure whether the hoped-for stronger correction will still occur, which will enable entry at favorable prices.”
Heibel himself is skeptical that there will be a correction – meaning price losses of ten percent from the previous high – or even a crash. He argues on the basis of sentiment theory, according to which a particularly bad mood is a contraindicator: Because when the mood is bad, many investors have already sold. As a result, prices can no longer fall so sharply, and a few buyers are enough to move the market back up.
There are still many pessimists who can be converted to optimists and thus come onto the market as new buyers.” Stephan Heibel, CEO of Animusx
“For the past three months, our sentiment analysis has consistently shown extremely negative expected values,” reports Heibel. As early as 2022, future expectations were consistently negative with a few exceptions, and the ongoing Dax rally only changed that for a short time this year. For the most part, the pessimistic expectations of the previous year have become even more pessimistic.
“This is not a sentiment that warns of a crash or a long-lasting correction,” explains Heibel. “On the contrary: there are still many pessimists who can be converted to optimists and thus come to the market as new buyers.”
Breather expected in the market
However, Heibel does not expect the rally to continue for the time being. In the first half of the year, the leading German index rose by almost 16 percent. “From a historical point of view, a breather can be expected in the summer months. Decision-makers treat themselves to a break, and so the stock exchanges mostly swing sideways when trading is thin. New upward impulses are hardly to be expected during the pickle season,” says Heibel.
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During this time, the sentiment expert sees the Dax as well secured at the bottom. Because private investors who hedged against falling prices, especially in April, have maintained their positions. At that time, the Dax was around 15,800 points.
Protection purchases offer support
Institutional investors are also still waiting for lower prices, says Hebe: “Your put purchases from April will remain in the portfolio.”
In such hedging transactions, an investor buys a put option on the Dax. To put it simply, the bank has to sell the Dax in the background. When the derivative is sold, the bank has to buy back the Dax. So when prices fall and investors cash in their hedges, it stabilizes the market.
Do you want to take part in the survey? Then let yourself be automatically informed about the start of the sentiment survey and register for the Dax sentiment newsletter. The survey starts every Friday morning and ends on Sunday afternoon.
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