Investors are becoming more optimistic – but there is no money for further purchases

Bull and bear

According to sentiment theory, investor sentiment is a contrarian indicator for further developments on the markets.

(Photo: dpa)

Dusseldorf The past trading days have been a rollercoaster ride for investors on the German stock market: On Wednesday, the German leading index Dax fell below the 15,600 point mark, and two days later it was back up to almost 16,000 points.

As a result, the mood on the stock market has brightened significantly, as the Handelsblatt Dax sentiment survey among more than 8,000 private investors shows. In a weekly comparison, the mood improved as much as it did at the end of June.

Sentiment expert Stephan Heibel, who evaluates the weekly survey for Handelsblatt and adds additional indicators, would not interpret this as a buy signal. For him, a continuation of the current sideways movement is the most likely scenario.

The trigger for the current change in sentiment was the interest rate decision by the European Central Bank (ECB). Although this increased the key interest rate again, it signaled that it could have been the last step for the time being.

>> Read about it: ECB continues to raise interest rates – now the peak is in sight

As a result, the assessment of the current stock market situation among private investors improved from minus 3.3 points to plus 1.3 points. At the same time, the great uncertainty has also disappeared.

The corresponding value rose from minus 3.2 to plus 0.1 points and is therefore in the neutral range. “In the absence of a directional decision, our survey participants are relieved that the lower support has held. But they are not yet really satisfied with their stock positioning,” analyzes Heibel.

However, expectations for the future are very optimistic. It remains at a high level with 4.0 points. Around half of the survey participants expect prices to rise in three months after the DAX has moved sideways since April.

“In the opinion of most investors, the directional decision that has not yet been made will be towards the north,” Heibel concludes.

The willingness to invest is correspondingly high. It is currently 2.6 points – it was last higher in mid-October of last year. The following week the DAX rose by 2.4 percent.

This growing optimism is also reflected in the Euwax sentiment of the Stuttgart Stock Exchange, where private investors trade. It shows how private investors assess the development of the Dax. If the value of the index is positive, the majority of investors are betting on a rising market. A negative value, on the other hand, means that investors are more likely to expect prices to fall.

Euwax sentiment is currently hovering around the zero line. Hedging positions were built up during the Dax rally in the first half of the year, but were reduced during the summer. “Investors are now in a slightly bullish position waiting for a directional decision,” observes Heibel.

Cash ratio only four times lower

An improving mood coupled with an increasing willingness to buy: That sounds constructive at first and could indicate rising prices. But Heibel sees a problem here: investors could lack the money for further purchases.

He is referring to the cash quota of investors, which Heibel also collects in a survey conducted by his analysis company AnimusX. Only four times in the past 16 years did survey participants in this country sit on less cash than they do today. This happened once in 2013 and three times in 2021.

This tends to coincide with the results of Bank of America’s monthly fund manager survey. Accordingly, institutional investors from Europe recently reduced their cash ratio from 4.9 to 4.3 percent. At peak times this was more than 6.0 percent. So you already have a lot of your free money at your disposal.


“There is hardly any cash left with which to buy more shares,” explains Heibel, who publishes the “Heibel-Ticker” stock market newsletter. “An impulse would have to come from abroad, but that is also rather unlikely due to the uncertain economic development in the Eurozone.”

He therefore considers a continuation of the current sideways movement in the Dax to be the most likely scenario. This was also the case in the previous four cases with high investment rates.

Do you want to take part in the survey? Then you will be automatically informed about the start of the sentiment survey and sign up for the DAX sentiment newsletter. The survey starts every Friday morning and ends Sunday lunchtime.

More: From the point of view of stock market psychologists, investors make these ten mistakes.

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