Dax: Die Börsenstimmung steigt, doch es fehlt das Geld für neue Käufe

The German stock market enjoys a turn in sentiment as investor confidence rebounds despite a lack of funds for new purchases. While the U.S. technology index Nasdaq 100 saw a loss of nearly two percent last week, the German leading index Dax gained 2.5 percent, significantly improving investor sentiment according to the Handelsblatt Dax-Sentiment survey.

However, the survey also reveals an increased risk of a market pullback. Handelsblatt interviewed over 10,000 private investors each Friday morning until Saturday evening to gauge current market expectations. Stephan Heibel, managing director of the analysis firm AnimusX, analyzed the responses and supplemented them with additional indicators.

The sentiment improved from minus 13.9 points the previous week to plus 21.7 points, the highest value since late August, though still far from extreme levels. Heibel explained, "It's a bit above average: good mood, but not euphoria. It seems the sentiment follows the prices, just as it usually does." The uncertainty that prevailed in the previous weeks has dissipated, with the corresponding value rising from 1.3 to 1.6 points.

"Some uncertainty remains, the value is still below average. But the world makes more sense to investors again," Heibel said. The uncertainty is measured by asking survey participants if their expectations for the previous trading week were met. The lower the value, the greater the uncertainty. Future expectations fell from plus 20.1 points the previous week to 11.8 points, the lowest since August.

Heibel regularly observes that market phase expectations fall when prices rise: "This is the usual reversal reflex. A portion of the expected recovery that we expected a week ago has occurred and consumed part of the recovery." Despite the increase in buying readiness from 52.9 to 55.5 points, Heibel does not overvalue the development: "Buyers are still somewhat more numerous, but there's no buying frenzy."

Meanwhile, the data from the derivatives market shows a decline in demand from institutional investors for put options, which serve as hedges as their value increases when prices fall. Professional investors, however, are buying call options to bet on rising prices. "Put hedges were dissolved over the previous week, leading to an extremely low put/call ratio.

Transactions normalized again by Friday," Heibel said, referring to data from the European derivatives exchange Eurex. Even without euphoria, investors are already heavily invested. Private investors bought hedging products as prices rose before speculating on a successful start to the next trading week by the end of the week. Overall, Heibel describes this as a normalization: "Sentiment and future expectations are both above average, but neither of the two values is extreme."

There is no euphoria, which would be a warning signal as it could mean that buyers are missing to push prices higher. A separate AnimusX survey of its clients shows that investors are still heavily invested without euphoric sentiment. "The cash quote remains at 14.4, the deepest level in years," Heibel reported. Many investors now have only a few cash reserves left to invest.

Heibel explained that this is comparable to the six phases in which investors have been invested since 2004, where the Dax was significantly lower six months later in five of these phases, on average 6.7 percent. This indicates a weaker safety net on the stock market. Heibel warned that if interest rate fears return before December, there will be few hedges and reserves to prevent a pullback. He advised investors to take profits from the week's gains and use them to trim risky positions.