The current consolidation on the stock market had been announced for a long time.
(Photo: dpa)
Dusseldorf Insecure, but still willing to invest – the mood among DAX investors is difficult to grasp these days. On the one hand, they indicate great uncertainty in the current Dax sentiment, on the other hand they want to invest in the market in the next two weeks. In the USA, the opposite picture emerges: there, the skeptics dominate the floor. Fund managers there have reduced their investment ratio.
For the sentiment expert Stephan Heibel, the current results of the Handelsblatt survey Dax Sentiment are contradictory and do not match the attitude of US investors.
“This week’s survey results do not show any imbalance that could move the stock markets in one direction or the other in the coming days,” Heibel concludes from the data. Even if no direction can be derived from investor sentiment: The exorbitant profits from autumn 2020 to summer 2021 with a plus of more than 38 percent still require a correction in the Dax. Since the beginning of July, however, the German stock market barometer has been moving sideways in a range between 16,000 points on the top and 15,500 points on the bottom.
“Even if the Dax should continue to rise now, I assume that we will see today’s level again sooner or later,” explains the owner of the analysis company Animusx.
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In many cases, with data that is difficult to interpret, Heibel scrutinizes two further indicators.
1. The five-week average
In the past, the five-week average of the sentiment has often indicated the end of a correction low (see graphic). In the corona crash in mid-March last year, this indicator slipped to a historic extreme. In autumn 2020, shortly before the US presidential elections and the approval of the first corona vaccine, this indicator will hit another low point, albeit at a comparatively higher level.
“We are currently still a long way from that,” says Heibel. His statement from a week ago remains: There is no fear, panic and horror for a stable floor.
2. High investment rate by investors
Another value that the sentiment expert likes to consult in such cases is the investment rate of the survey participants: At 45 percent, investors have currently invested as much of their capital as rarely before. Heibel’s conclusion: “Even if investors are optimistic and have a high willingness to invest, they do not currently have the necessary change to implement their purchases.”
Current survey data
The past week of trading was turbulent: on Monday lunchtime, the Dax was now 4.5 percent lower than before the weekend. The impending collapse of the Chinese real estate company Evergrande, the upcoming central bank meeting and the spreading delta mutation gave investors sufficient reasons to take some profits or even to liquidate many positions in a slight touch of panic.
On Wednesday, the fears were gone again: An Evergrande bankruptcy was averted, US Federal Reserve Chairman Powell was emphatically moderate, and the number of infections fell. This enabled the stock markets to make up for the losses. There were hardly any changes on a weekly basis.
The price slide and subsequent recovery happened so quickly that investors didn’t even have time to panic enough.
Was this trend positive or negative in the past trading week? Investors don’t seem to be clear about this. The investor sentiment is quoted accordingly with a value of minus 0.2 in the neutral area.
Nevertheless, there is uncertainty among investors who had neither suspected the speed of the rollercoaster ride nor were able to react to it in a controlled manner. The corresponding indicator has reached a value of minus 1.3.
Insecure investors tend either to do nothing or to sell stocks. Buying takes self-confidence, but there is currently no sign of that.
After all, the expectation of the future Dax development has jumped significantly. With a value of plus 4.2 there is extreme optimism, the bulls clearly dominate when it comes to future expectations. The conviction should also be followed by deeds, the willingness to invest has jumped to plus 1.8, the highest value since March of this year.
The Euwax sentiment of the Stuttgart Stock Exchange, on which mainly private investors trade, has fallen to a neutral value of two. A positive value indicates an overhang of call leverage products on the Dax. Since this value has been higher in the past few weeks, the decline shows that the bullish positions that had built up at short notice were reduced again over the course of the week.
The put-call ratio on the Chicago futures exchange CBOE shows again an extremely bullish positioning of US investors. The extreme call speculation that had predominated since July of last year has been rebuilt.
The US fund managers behaved very differently: They reduced their investment quota by ten percentage points to 77 percent. US private investors show a bull-bear ratio of minus nine percent: There, the bears are clearly in control. 39 percent of investors there expect prices to fall.
The “fear and greed indicator” of the US markets, calculated on the basis of technical data, shows moderate fear with a value of 33 percent. Other short-term technical indicators have now compensated for the situation that was in the meantime severely oversold from the beginning of 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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