Market Sentiment: “Sudden Outbreak”

May 6, 2026. FRANKFURT (Goldberg & Goldberg). Since our last sentiment survey, one could certainly have gotten the impression that the DAX lacked the strength to sustain a sustained upward trend. The constantly shifting news landscape surrounding the war with Iran—particularly developments in the Strait of Hormuz—initially left little room for upward momentum, especially for European stocks. However, it is also true that price setbacks remained limited, resulting in an overall stable stock market picture.

And indeed, renewed optimism overnight ensured that even the DAX finally managed to make a significant jump higher once again. And although geopolitical news is driving trading activity, references to the controversial stock market adage “Sell in May” are popping up here and there in the form of comments. At least in the first week of May, however, we can report a 3.1 percent gain, which is hardly an invitation to heed this old myth.

The past week’s sentiment survey appears to have triggered quite different reactions among the institutional investors with a medium-term trading horizon whom we surveyed. Two distinct camps have emerged. On the one hand, the bulls, whose share has grown by 6 percentage points, while on the other hand, the bears have seen a larger increase of 8 percentage points.

Strong polarization

In other words: Today’s survey has revealed a significantly increased, asymmetrical polarization between bulls and bears, which is why our Deutsche Börse Sentiment Index has fallen by only 2 points to a new level of +15. The group of those who expect the DAX to remain unchanged has nearly halved and now accounts for only 15 percent of all respondents.

Among retail investors, we also observe little net change in sentiment, as the Deutsche Börse Sentiment Index for this group rose by just 2 points to a new level of +6. While those we survey via social media remain largely bullish, the remaining investors, much like institutional investors, are also showing a polarization between bulls and bears, albeit not as pronounced. However, the sentiment index in this subgroup has risen by one point to a new level of -3.

Return of foreign demand?

This means that the gap in sentiment between retail and institutional investors has narrowed slightly compared to the previous week. Nevertheless, what stands out most is the strong polarization between bulls and bears among institutional investors, which seems somewhat strange at first glance. However, it should not be forgotten that some of the new pessimists are former bulls who, confident that the DAX would continue to move sideways, took profits and may even have reversed their positions by 180 degrees. The large group of new optimists, however, consists predominantly of investors who were previously neutral, at least a significant portion of whom apparently believe that the DAX may still have some catching up to do relative to U.S. stocks.

The current optimism among institutional investors, which is not particularly pronounced, is put into perspective when looking at the three-month period or the performance since the start of the year, where we actually see a slightly negative trend. All in all, the technical sentiment has improved compared to the previous week, although we expect selling pressure on the upside from profit-taking on bullish positions, which could, however, be offset by stop-loss buying from bearish investors. After all, the DAX’s previous record high suddenly does not seem all that far off. Whether a sustained upward trend develops, however, also depends on long-term investors, primarily from abroad, who, after a prolonged period of restraint, must ultimately come to believe once again in a significantly rising European market.

by Joachim Goldberg

May 6, 2026, © Goldberg & Goldberg for Deutsche Börse

The Deutsche Börse Sentiment Index ranges between -100 (total pessimism) and +100 (total optimism), with the transition from positive to negative values marking the neutral line.

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