Spectrum Markets: Sentiment Data Showed Retail Traders were Bullish on US Indices Last Week, Suggesting They Were Buying the Dip

Trading Systems
27.07.2021 12:05 pm

Spectrum Markets, the pan-European trading venue for securitised derivatives, saw European retail investors were bullish on US indices last week, suggesting they were buying the dip.

Spectrum’s SERIX^TM indicator of European retail investor sentiment (see below for more information on methodology) values for S&P and DOW both hit their month high, 119 and 116 respectively on 19^th.

This suggests these retail investors were buying the dip in US stocks last week, due to the aggressive fall on Monday on concern a rebound in Covid cases would slow global economic growth.

“The sharp jump in SERIX values for these key US indices at a time when the wider market was down suggests European retail investors saw an opportunity to take advantage of the situation by buying the dip," said Thibault Gobert, Sales Executive at Spectrum Markets.

Calculating SERIX^TM data

The Spectrum European Retail Investor Index (SERIX^TM), uses the exchange’s pan-European trading data to shed light on investor sentiment towards current development in financial markets.

The index is calculated on a monthly basis by subtracting the proportion of bearish trades from the proportion of bullish trades, to give a single figure (rebased at 100) that indicates the strength and direction of sentiment:

SERIX^TM = (% bullish trades - % bearish trades) + 100

Trades where long instruments are bought and trades where short instruments are sold by retails investors are both considered bullish trades, while trades where long instruments are sold and trades where short instruments are bought by retail investors are considered bearish trades. Trades that are matched by retail clients are disregarded. (For a detailed methodology and examples, please visit this link).