It is too late for investors to buy but still too early to sell

The German leading index

Experts see the mood on the stock market significantly clouded.

(Photo: AP)

DusseldorfNone of the many hotspots have solved the past trading week – and yet the Dax has increased significantly. "Investors are skeptical and secure themselves off," said Stephan Heibel after evaluation of the Handelsblatt survey Dax sentiment and other indicators.

In view of the very low investment ratio, many investors would have prepared for significantly lower prices on the markets. Finally, US President Donald Trump is unpredictable and could trigger a fierce sell-off with just a tweet.

But the analyst of the analysis house Animusx has another explanation for the low investment rate including low sales and willingness to buy in the coming weeks: "The past week's gains have made many investors aware that they have already made good price gains this year." Many would have reduced their commitment and want the summer over relaxed from the sidelines watching the price development.

For Heibel, prices could certainly increase in the summer weeks with a thin trading volume. There could also be some turbulent days on the stock market. "But I exclude a heavy sell-off, but investors are now too defensive positioned," said the expert.

By way of explanation, there are two assumptions behind the weekly Handelsblatt survey of more than 3500 investors on the stock market sentiment: If many investors are optimistic, they have already invested. Then there are only a few left who can still buy and thus increase prices. Conversely, if investors are pessimistic, they have not invested in the majority. Then only a few can sell and thus push the prices.


The past trading week was a lesson in how helpful the sentiment analysis can be when making an investment decision. "Finally panic" was the motto last Monday. According to Heibel, the German leading index had reached a level suitable for purchases.

It followed a stock exchange week, which is hardly to be surpassed skepticism. Investors fled to safe havens such as bonds and gold. Nevertheless, the Frankfurt benchmark saw its best week of the year 2019 with an increase of three percent. The current stock market year is not a weak one: The Dax has already risen by more than 2000 points in the first five months.

It seemed a week ago no way out: US President Donald not only threatened countless countries punitive tariffs, but also acted their own companies such as Alphabet and Facebook. The unregulated Brexit becomes more likely and the economy goes to its knees. "Just then, the stock market finds a bottom," explains Heibel.

For him, there are always two options: Either the crises are solved, or sales panic leaves no one back, who can still sell shares on a large scale. Since no hotspot was solved in the past week, this time the sales panic provided for a floor from which the prices increased significantly.

Sentiment expert Joachim Goldberg sees the market currently in a sideways constitution. If the Dax rises, the new optimists would probably want to realize their profits between 12,100 and 12,200 points, said the behavioral economist after evaluating the survey of the Frankfurt Stock Exchange on Wednesday last week. If the prices fall, however, there is buying interest between 11,700 and 11,750 points. Because: Currently, about 30 percent of institutional investors are waiting on the sideline for entry.


Investor sentiment in the Handelsblatt survey Dax-Sentiment has barely made any headway following the strong price gains: only one in four (minus 38 percentage points compared to the previous week) sees the German leading index in a downward momentum.

But the number of pessimists is still twice as high as that of the optimists, because only eleven percent of respondents see the index in an upward movement – an increase of ten percentage points compared to the previous week. With 44 percent (plus 19 percentage points), most people expect a sideways movement.

Compared to the extremely bad mood in the previous week, the sentiment is currently only a moderate negative with a value of minus 1.4.

Only a few have expected this price jump in the past trading week: Six percent (minus two percentage points) indicate that they speculated on such a price jump a week ago. A further 42 percent (plus 14 percentage points) feel that their expectations are largely confirmed. In contrast, 37 percent (plus five percentage points) hardly live up to expectations.

Only 15 percent (minus 17 percentage points) have expected a completely different stock market trend. The strong uncertainty of the previous week has indeed declined, but with a value of minus 3.7 is to see the self-assurance of investors little.

In which phase of the cycle do you think the markets are up-to-date?

numbers in percent

The acute panic of the previous week has changed into a moderate skepticism about the future, and investors' expectations for the Dax have only slightly shifted in three months. 16 percent (plus one percentage point) then expect rising prices, while 29 percent (plus two percentage points) are still concerned about falling prices.

With 42 percent (plus three percentage points), most investors expect sideways movement this summer. With a value of minus 2.2, however, the bears continue to dominate the future.

To sell too late, to buy too early, is the conclusion of the vote on willingness to invest. 16 percent each want to buy in the coming two weeks stocks (minus three percentage points) and downsize (minus six percentage points).

With 68 percent (plus nine percentage points), more investors than ever want to wait and see how the stock market develops before they make an investment decision. "That's probably helplessness," says the Animusx owner.

Which cycle phase do you expect in three months ??

numbers in percent

The Euwax sentiment of the Stuttgart Stock Exchange, which is mainly retail investors, has fallen to a value of 2.6. This indicator is calculated using real trades with leverage products on the Dax. A positive reading shows that more call products speculating on rising prices are in private investor custody than short products, which appreciate on falling prices. Only a week ago, the number of call products was significantly higher.

Institutional investors who hedge via the Frankfurt derivatives exchange Eurex have behaved in the opposite direction: they have reduced their hedges and the number of short options has decreased.

On the other hand, their US counterparts remain cautious, as the call / call ratio of the Chicago derivatives exchange CBOE shows. US fund managers cut their investment ratio by five percentage points to just 55 percent, the lowest level of the current year. US private investors are extremely negative, the US bull / bear ratio is with minus 20 percent clearly in negative territory. The bears – they are symbolic of falling stock prices – thus have the upper hand.

The "fear and greed indicator" of the US stock markets, which is based on technical stock market indicators, at 29 percent, does indicate fear, but has not reached any extreme.

Will you trade in the next two weeks?

numbers in percent

The Handelsblatt survey starts every Friday and ends on Sunday. You will read the analysis on Handelsblatt Online the day after.

It is easier for readers who sign up for a free reminder mail. You will automatically receive an e-mail requesting you to participate in the survey, and another if the expert review is available on Handelsblatt Online.

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