City Index trader sentiment survey April edition

We are delighted to launch the first City Index trader sentiment survey. This new trader survey collates the general confidence of active City Index clients and their views for the next six months to gauge how strong current prices are and where they could head in the near-term.

Clients are bullish on both the stock market and GBP

The results from the survey show a healthy confidence in both the stock market and GBP currently but there’s an indication that over the next six months both markets could lose some momentum.

When asked how strong traders felt the stock market currently is, the average weighted score was 69, which rates as fairly high on the confidence scale. This indicates that traders are confident that the stock market will continue to gain in strength over the coming weeks. However, a score of 61 was given for how strong traders felt the stock market would be in six months’ time. This insinuates the feeling that traders believe the stock market will lose some of its momentum in the near-term.

This may be because traders are anticipating an adjustment to likely interest rate hikes in the US and looming hikes in the UK.

When it comes to the GBP, traders are still confident but on a lesser scale to that of the stock market. Traders feel the GBP strength is on a scale of 55 but are more confident in the next six months, giving it a scale of 58. This could be because traders feel that the uncertainty surrounding the general election poses a threat to the strength of the GBP right now, but would recover in the near-term once we pass the May 7th election.

For more information on how this survey works, please see the final paragraph of this article.

Survey results

Here are the results from the inaugural City Index trader sentiment survey.

Question	Score (0 is weak, 100 is very strong)
How strong do you think the stock market is?	69
How strong do you think the stock market will be in the next six months?	61
How strong do you think the GBP is?	55
How strong do you think the GBP will be in the next six months?	58
How confident are you trading the markets at the moment?	57

How does the survey work?

On each of the five questions posed, clients are asked to provide a score of between 0, for very weak, and 10, for very strong. We then collect all responses and create a weighted average before multiplying by a factor of 10 to create a score between 0 and 100.

A score towards the bottom end of the 0-100 scale indicates low confidence in the markets and a willingness to sell into prices, expecting a sell-off. Alternatively, a score towards the top of the scale indicates high confidence in the markets and a motivation to buy into prices, expecting the markets to rally. A score at 50 would indicate opinions are fairly balanced.

Scale	Explanation
0 – 10	Expectations are very weak and conviction selling
11 – 20
21 – 30
31 – 40
41 – 49
50	Opinions are fairly balanced and neutral
51 – 60
61 – 70
71 – 80
81 – 90
91 – 100	Expectations are very strong and conviction buying

Our next trader’s sentiment survey will be published in May.

This article is based on April’s City Index client sentiment survey. On average, the survey had a 2.8% response rate, giving the results a 93% level of confidence (based on a margin of error of +/- 8%.

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