Dusseldorf The fear and panic of investors from the previous week is over, but an extremely pessimistic mood still prevails. This is shown by the current data from the Handelsblatt survey Dax sentiment.
For Stephan Heibel, who evaluates the weekly survey, it is no longer possible to derive an extremely large imbalance. Accordingly, there is no clear forecast for further price development.
Just a week ago, when panic reigned, the sentiment expert predicted an end to further significant price losses. Since then, the Dax has risen slightly on a weekly comparison, with strong fluctuations. However, the plus since the low point last Monday is already 700 points.
According to Heibel, the recovery that many institutional investors have obviously speculated on is currently underway. In his opinion, everything is still possible: a continued bottom formation in the Dax, a dive to new lows and also overcoming important resistance. “The direction decision is pending,” says the owner of the analysis house AnimusX.
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However, despite a lot of negative news, the Dax has not slipped to a new correction low. These include, for example, the recession scenario of leading German economic institutes and the increase in interest rates by 75 basis points by the ECB.
“An extremely negative mood after negative events and yet slightly rising prices in a weekly comparison suggest that all the bad news is known,” explains Heibel. “It’s difficult to forecast further falling prices based on this mood.” In his opinion, due to this constellation, there is a possibility that there is currently a bottom formation.
Current survey data
Investor sentiment rose to minus 3.6 from minus 6.5 last week. This means that investors are still in an extremely bad mood, but at least there is no more fear and panic.
With a value of minus 3.6, the uncertainty among our survey participants is still extremely high. But here, too, there has been a slight improvement compared to the previous week. Last Monday, this value was still minus 5.8.
Against the background of this mood development, the expectations are surprising. After plus 1.0 in the previous week, optimism about the future fell to minus 0.1 percent this week. The willingness to invest has risen to plus 1.9 after 1.4 in the previous week.
But why are more investors willing to invest if they don’t believe in sustained price increases?
There are two possible interpretations: Either they only want to enter into very short-term speculation and set a recovery movement in the intact bear market. Alternatively, investors prepare themselves for a prolonged bear market and invest in financial products that increase in value when prices fall, such as put warrants.
The Euwax sentiment of the Stuttgart Stock Exchange, where private investors trade, is neutral. In the portfolios, the number of call leverage products, which are used to speculate on rising prices, is identical to that of put derivatives, which investors use to hedge against falling prices.
At the current price level, private investors obviously feel adequately protected, because many hedging transactions with put derivatives have been entered into and sold again in the past few weeks. At the same time, there is obviously little hope of rising prices, because there is little speculation about rising prices.
Institutional investors who hedge themselves via the Frankfurt futures exchange Eurex are in a more bullish mood: the put/call ratio is at 0.4, the lowest level in recent months.
So more and more call options are being bought. Institutional investors are therefore counting on rising prices in the coming weeks.
The put/call ratio of the Chicago futures exchange CBOE is also declining, thus showing increasing interest in speculation on rising prices. However, the level in the USA is not yet comparable to that in Germany. The value of 0.65 is more in line with the average of the past few months. The CBOE uses a different calculation method than Eurex.
US fund managers are sticking with the record-low investment ratio of just 27 percent. US private investors remain extremely pessimistic.
The bull/bear ratio shows a value of minus 35 percent: pessimists, called “bears” in stock market jargon, are clearly in the majority. While 53 percent of US private investors are pessimistic, only 18 percent remain optimistic.
At least among private investors in the USA, extreme values can again be seen. The “fear and greed indicator” of the US markets, calculated using technical market data, shows moderate fear at 42 percent.
Extreme values on the oil market
On the other hand, there are extreme values on the oil market: the five-week average of sentiment shows an extremely pessimistic state. Both the short-term sentiment and future expectations are at an extremely negative level, signaling fear and panic on the oil market.
Crude oil prices have fallen by almost a third since June. He gave up all his winnings since Russia invaded Ukraine.
Due to the panic mood, the sell-off on the oil market is likely to have passed its zenith for the time being. A countermovement in the oil price is now quite possible from the point of view of sentiment theory.
There are two assumptions behind surveys such as the Dax sentiment with more than 7,000 participants: If many investors are optimistic, they have already invested. Then only a few are left who could still buy and thus drive prices up.
Conversely, if investors are pessimistic, the majority of them have not invested. Then only a few can sell and thus depress the courses.
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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