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Spectrum Markets, the pan-European trading venue for securitised derivatives, has published its SERIX European retail investor sentiment data for August and has noted the continuation of “significant bearish trading” related to Spain’s IBEX 35 index.

After dropping from a nine-month high in June to 105 in July, retail investor sentiment on the IBEX 35 fell further in August to reach a bearish SERIXT value of 95. This came as international investors contemplated the twin pressures of rising COVID-19 infections and the rapidly deteriorating situation in Afghanistan.

“Though the rate of new Spanish COVID-19 cases looked to be slowing into August, the IBEX 35 has struggled to maintain the upward trend it started in mid-July, and the SERIX data suggests retail investors are starting to get a bit nervous,” notes Thibault Gobert, Head of Liquidity Pool at Spectrum Markets.

IBEX: retail investors preparing for sell off?

“If the IBEX 35 experiences another significant decline, like the one seen in the second half of June, this could trigger further selling and, looking at the clear bearish signals we are seeing in our data, retail investors seem to be preparing for this scenario either by taking profits or positioning themselves for a drop in the near term,” Gobert added.

During August, 60 million securitised derivatives were traded on Spectrum, with 33.1% of trades taking place outside of traditional hours (i.e. between 17:30 and 9:00 CET). 80.4% of the traded derivatives was on indices, 10% on currency pairs, and 9.6% on commodities, with the top three traded underlying markets being DAX 30 (27%), NASDAQ 100 (16.7%) and OMX 30 (13%).

Looking at the SERIX data for the top three underlying markets, the DAX 30 moved back into bearish territory, dropping from 101 to 99 while the NASDAQ 100 also dropped two points, to 96. Meanwhile the OMX 30 recovered some of the bullish momentum seen earlier this year, rising from 92 to 99 in August.

How is the European Retail Investor Index calculated?

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

The index is calculated on a monthly basis by analysing retail investor trades placed and 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 = (% bullish trades – % bearish trades) + 100

Trades where long instruments are bought and trades where short instruments are sold are both considered bullish trades, while trades where long instruments are sold and trades where short instruments are bought are considered bearish trades. Trades that are matched by retail clients are disregarded.

Spectrum Markets is the trading name of Spectrum MTF Operator GmbH. Headquartered in Frankfurt am Main, Germany, it is a pan-European trading venue for securitised derivatives aimed at financial institutions and their retail investors. Since launch, trading has been available in: Germany, France, Italy, Spain, Sweden, Norway, the Netherlands, Ireland, and Finland

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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