Investors’ willingness to buy is sufficient for a good start to the year

Dusseldorf Equity investors who, despite the fear of the Omikron variant, remained involved in the German benchmark index were able to reap an annual increase of 15.8 percent. The current data from the Handelsblatt survey Dax Sentiment is correspondingly pleasing. All values ​​from short-term sentiment to willingness to invest are in the moderately positive range.

However, that makes a forecast for the future development of the German stock market difficult. Because the sentiment analysis rather filters out extreme situations in investor sentiment and derives likely consequences for the Dax or other asset classes. The currently largely neutral mood can therefore hardly give any indication of direction.

After evaluating further indicators, sentiment expert Stephan Heibel expects “a breather after the year-end rally before the price level motivates investors to make further purchases”. Sentimental remains healthy in the medium term. “There is enough willingness to buy to have a good start to the year after a small setback”, says the owner of the analysis company AnimusX.

Extreme sentiment in the euro / dollar currency pair

The euro exchange rate against the dollar fell by eight percent to $ 1.13 in 2021. At the end of the year, investor sentiment on the European single currency slipped to extreme pessimism, which is considered a counter-indicator. According to the sentiment analysis, this allows the conclusion that the euro is unlikely to slide below the provisional low of $ 1.12 in the next four to six weeks.

A panic sell-out is still missing for Bitcoin

With the cryptocurrency Bitcoin, both the current mood and the expectation of the price in three months are at a low level. So the mood is bad, expectations of future price increases are low – which is an indication that prices are more likely to rise.

But Heibel remains cautious: “Extreme values ​​that are measured after a panic sell-off do not yet exist.” In his opinion, however, a further decline in the Bitcoin rate could cause panic and, according to the sentiment analysis, would then be an opportunity to buy. Because after a panic sell-out, only a few purchases are enough to make the price rise again.

Current survey data

The Dax closed the shortened trading week between the holidays with a slight plus of 0.8 percent. Accordingly, investor sentiment is showing its good side at the end of the year with a value of 1.8. Even complacency rose significantly to 2.1 after a few weeks of uncertainty. The future expectation for the Dax is still moderately bullish with a value of 2.3. With the exception of three weeks in November, expectations for the future have been largely optimistic since last summer.

But this always positive value has another side effect. Without a trigger, it will be difficult for the German benchmark index to climb to the same extent as at the end of December. To do this, we need new positive news, for example about the imminent end of the corona pandemic.

The willingness to invest is also moderately constructive with a value of 1.4. Investors are ready to buy, but there is still a lack of clarity as to which stocks could have the best odds in 2022.

The Euwax sentiment of the Stuttgart Stock Exchange, on which private investors trade, has slipped to a neutral value of minus three. This value shows a slight overhang of short versus call products in the portfolios of private investors.

A comparison with the previous data allows the conclusion: speculations on rising prices were closed at the turn of the year, but hedges with short products were hardly made in return.

With a value of 2.1, the put / call ratio on the Frankfurt derivatives exchange, Eurex, also shows a neutral positioning of the professionals. Institutional investors also scaled back their long positions at the turn of the year.

Investors behave similarly in the US. The put / call ratio of the Chicago futures exchange CBOE rose to 0.55 on the last trading days of last year and is therefore in the neutral range. Long positions were also trimmed on the US stock exchanges. The US fund managers, who have increased their investment ratio from 67 to 86 percent, show the opposite behavior.

The optimists are slightly overweight among US private investors: the bull / bear ratio has risen to seven percent after the bears were in control in the previous weeks. But the bulls’ camp has been filled with neutral investors. The number of bears has remained almost unchanged.

The “fear and greed indicator” of the US markets, calculated on the basis of technical market data, shows slight greed with a value of 61 percent, but it is a more typical value across the Atlantic. Other more volatile technical indicators point to a correction in the equity markets, at least in the short term.

Note: For technical reasons, there was no evaluation of the survey last week.

There are two assumptions behind surveys such as the Dax Sentiment with more than 6,000 participants: If many investors are optimistic, they have already invested. Then there are only a few 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 prices.

Would you like 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 on Sunday noon.

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