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Spectrum Markets comments on latest Silicon Valley Bank news: Retail investors stay calm on SVB news as trade volume doubles but sentiment remains stable.
Concerns for Silicon Valley Bank began to spread last week, but despite this climate of uncertainty, the latest data on SERIX, the retail investor sentiment indicator regularly released by Spectrum Markets, showed that on Friday, retail investors remained calm, not reacting strongly to the news.
Last week’s average SERIX sentiment for both the NASDAQ 100 and the S&P 500 increased compared to the previous week, shifting from 100 to 101 and from 97 to 108 respectively, with both indexes crossing the 100 threshold to enter the bullish area.
On Monday there was a definite uptick in activity, with volumes increasing strongly as trades almost doubled against their daily average, to the highest level in the last six months, though this did not significantly undermine the overall sentiment.
SERIX sentiment remained more or less stable, only recording a slight dip to 92 and 98 for the NASDAQ 100 and S&P 500 respectively. As such, retail investors do not seem to believe that we are on the verge of a new Lehman, trusting the reassurances coming from the US government and the Federal Reserve.
This week we will have the chance to hear directly from the ECB and to test its reaction to the news. It will be interesting to understand if there will be a change to the central bank’s interest rates hike schedule or at least a change in rhetoric.
Calculating SERIX data
The Spectrum European Retail Investor Index (SERIX) uses the exchange’s pan-European trading data to shed light on investor sentiment towards current development in financial markets.
The index is calculated 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. (For a detailed methodology and examples, please visit this link).
