Stock market investors expect share prices to rise

Sculptures of bull and bear in front of the Frankfurt Stock Exchange

The Handelsblatt survey Dax Sentiment shows: The camp of neutral investors has grown. It has gained popularity from both sides.

(Photo: dpa)

Dusseldorf The setback on the stock market from the previous week depresses investor sentiment. That is the result of the Handelsblatt survey Dax Sentiment among more than 6000 private investors.

Sentiment expert Stephan Heibel, who evaluates the weekly survey for the Handelsblatt, explains: “A week ago we read from the sentiment data that many investors had positioned themselves for rising prices. So the setback came as a surprise and led to a dejected mood among investors. ”Investor sentiment fell from plus 0.7 to minus 1.0. Satisfaction fell from plus 0.6 to minus 1.6.

The German leading index Dax lost 3.2 percent in value last week: From its weekly high of 15,960 points it went down to 15,454 points by Thursday. Then the European Central Bank (ECB) calmed the markets by announcing that it would cut its bond purchases only moderately, leaving open the end date of its bond purchase program PEPP.

Ultimately, the Dax ended the week 1.1 percent in the red at 15,610 positions. This enabled the Frankfurt stock exchange barometer to defend important technical support brands: On the one hand, there was buying interest before the two July lows at around 15,400 points. On the other hand, the mark of 15,600 points held: This was tested several times in the past few weeks, but never breached sustainably – and has therefore been a springboard for an increase in the direction of 16,000 points on several occasions.

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The course of trading has changed the situation among private investors: Many “bulls” who expected prices to rise have become thoughtful. You are now neutral. For many “bears”, on the other hand – that is, investors who expect prices to fall – the price slide from the previous week has already been enough. They have also moved to the neutral camp.


“The strong polarization that we put in the foreground a week ago has now been canceled,” explains Heibel. In the previous week, many investors had expected prices to rise, but were already heavily invested themselves. Heibel therefore questioned whether there were still enough buyers for further price gains.

On the other hand, there are now enough underinvested bulls available as buyers, reports the sentiment expert: The willingness to invest has risen from 0.1 to 0.8. Anyone who is underinvested now would come under pressure to act if prices rose, says Heibel: “You would chase after the rising prices.”

For a good three months, the Dax – apart from short outliers – has been in a trading range of 15,400 points on the bottom and 16,000 points on the top. On Monday, the index was around 15,700 points, only marginally below the level at the beginning of June. Since the trading range has narrowed further recently, a breakout from this range seems close – in which direction, however, is unclear.

The majority of investors are currently anticipating rising prices: Future expectations are plus 4.3 – the highest value since mid-December. From a value of four we speak of “extreme optimism”. Every second respondent anticipates that the Dax will be in an upward trend or even top-class in three months. Only one in five expects prices to fall.

As a result, the leading index is susceptible to a correction: Because there is now not much support on the underside, explains Heibel. Many bears would have scaled back their bets on or their protection against falling prices after the latest setback. In the event of another setback, the pessimists would therefore not be ready to catch a sell-off early.

This can be seen from the Euwax sentiment for private investors, among other things. After hedging transactions dominated three weeks ago, the majority of investors are now speculating on rising prices. The Euwax sentiment rose from minus 13 to plus 4.5 during the period.

This indicator is calculated on the basis of real trades with leverage products on the Dax. A plus value indicates an overhang of call products – i.e. bets on rising prices. If the value is negative, there are more put derivatives in the portfolios of private investors – so bets on falling prices.

A downward trend could be reinforced by the large camp of optimists, explains Heibel. “The bulls tend to be influenced by the direction of the stock market. In other words: when prices fall, bulls quickly mutate into bears. ”That could accelerate the price decline.

Heibel therefore warns that the setback from the previous week could only have been a first test of the technical chart support: “Next time, buyers could be absent who would prevent further slipping.” Especially since the investment rate among private investors is comparatively high and the cash rate in return is very low. “This also suggests that the danger is more likely to be found on the underside.”

How professionals position themselves

Professional investors who hedge themselves via the Eurex futures exchange have a put / call ratio of 1.4. This indicates a fairly balanced, slightly optimistic positioning. The situation is similar in the USA, where the put / call ratio of the Chicago futures exchange CBOE is also in the slightly bullish range.

US fund investors have meanwhile reduced their investment ratio by nine percentage points to 85 percent. A comparatively neutral positioning can also be seen here.

With US private investors, the bulls slightly dominate with a bull / bear ratio of twelve percent after ten percent in the previous week. Last week, five percent of the optimists left the bull camp, and five percent of the pessimists left the bear camp. The neutral camp has grown from 23.2 percent to 33.9 percent compared to the previous week. The technical fear-and-greed indicator of the US benchmark index S&P 500 also shows a neutral constitution at 42 percent.

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.

More: German investors buy more than 90 tons of gold in the first half of the year.