Sentiment-Umfrage: Siegesrausch mit Risiko: Wenig Anzeichen für Dax-Konsolidierung – aber erste Warnsignale

August's place in stock market history is often modest, but this year it has been different. So far, in August, the DAX has gained around 3.5 percent. The summer rally continues, with a minor setback observed about four weeks ago, which is unsurprising given the positive sentiment among DAX investors. There are currently few signs of market consolidation, although trading volumes have noticeably decreased in recent days.

However, initial warning signs have been identified, which investors should pay attention to. The new analysis of the Handelsblatt DAX sentiment survey reveals this. Handelsblatt conducts this survey every weekend, questioning approximately 10,000 private investors about their market assessment. Stephan Heibel, the owner of the analysis firm AnimusX, evaluates the responses and adds additional indicators to conduct his analysis and provide recommendations.

Since the DAX first surpassed 26,000 points at the beginning of August, it has remained consistently above this round number. This indicates a robust movement, with sufficient buying interest to push prices higher. Currently, 75 percent of respondents place the DAX in an upward trend or a top formation. The sentiment (sentiment) level is consequently persistently positive at 3.5 points, with extremities ranging from plus to minus four points.

Self-satisfaction slightly improves to 1.9 points, calculated by asking investors if their expectations have been met over the past week. The higher the percentage of investors affected, the higher the value.

The current survey shows that 76 percent of respondents believe their expectations have been fully or mostly met. In sentiment theory, very high sentiment and high self-satisfaction can be warning signs. When investors are optimistic, they have already incorporated this assessment into their investment behavior and invested. If the sentiment is very high, it may indicate that too many investors are already invested, leaving insufficient buyers to push prices even higher.

The fact that sentiment has slightly declined compared to the previous week (4.2) can be interpreted as a positive sign. This is not contradictory to the fact that expectations have been met. The five-week average of sentiment is now at 3.1 points. Self-satisfaction has not reached a very high level, but the trend is increasing, which Heibel finds increasingly noteworthy.

Self-satisfaction is understandable given the many new records, and this aligns with reality, the expert says. However, he warns: "In the euphoria of victory, even if it is justified, many criticisms are no longer taken into account." Other raised indicators paint a contradictory picture. For example, investment readiness remains in the neutral range at 1.0 points.

Meanwhile, the optimists' share in the DAX development outlook has lost some ground in the past three months, with only 24 percent (down from 28 the previous week) expecting an upward trend, compared to 21 percent (17 the previous week) anticipating a downward trend. At the same time, private investors have dissolved their hedging against falling prices, shifting to a 180-degree change.

In the previous week, the number of put options in the Euwax sentiment of the Stuttgart stock exchange dominated. Such financial products allow investors to hedge against price losses. The increased hedging inclination had already been present at the start of the rally and served as a form of stabilization when selling pressure emerges.

Rising stock prices increase the pressure on holders to liquidate these products, which can further accelerate an upward movement in the market without a fundamental basis (short squeeze). However, this extreme scenario has not occurred, as positions have been liquidated without such a short squeeze taking place. Notably, private investors are now speculating on further price gains, covering themselves with call options, the counterpart to put options.

The Euwax sentiment ratio compares the number of puts and calls. In contrast, institutional investors remain cautious, with their put-to-call ratio at a neutral level, indicating they are waiting for now. For the overall market, this could be a positive sign, Heibel believes. The reserve of professionals moderates the growing self-satisfaction of private investors, as they want to participate in the survey.

To participate, simply sign up for the DAX sentiment newsletter, which launches every Friday morning and ends on Saturday evening. More: The stock market praises a possibly overly optimistic scenario.