Introduction
Launched in June 2023, the TTF sentiment survey is the longest-running, uninterrupted and most engaged sentiment survey in the energy industry.
The survey is opened on Saturday morning and runs until Sunday night on LinkedIn every week. Between 200 and 250 energy industry professionals with a real stake in the market are voting every week in our TTF sentiment survey.
The weekly results are published for free in the Clever Markets newsletters and LinkedIn posts. But the backhistory and proprietary indicators based on the poll results are only available to Clever Markets clients.
The TTF front-month contract is the most liquid gas product in the energy industry and closely observed by most market participants. Many markets are closely correlated with the TTF.
Deriving tradable signals from the survey data is not as straightforward as it may seem at first. Please read the findings and interpretation guide carefully.
The raw sentiment data is surprisingly noisy and far more erratic than price data itself. We initially looked for correlations between sentiment and prices but found little direct relationship.
However, there was a more interesting link when comparing sentiment to last week’s price returns. This suggests that many poll participants are backward-looking, letting recent price action colour their market view for the week ahead.
Sentiment data tends to lag, not lead. This makes it useless in trending markets.
However, the sentiment poll can still be useful in a mean-reverting market as a contrarian indicator.
Poll results in a trending market
The key insight is that sentiment alone doesn’t offer a reliable trading signal. Most participants appear to be voting in line with past price action rather than anticipating future trends.
For example, if the market is in a sustained uptrend, the sentiment will be bullish for the week ahead. If the market then turns lower, the sentiment for the week ahead will quickly turn bearish as well.
Statistically, a rising bullish sentiment often preceded weak or even negative price performance in the following week. In other words, sentiment acted as a weak contrarian signal, not a predictive one.
So if the market is trending in a direction, relying on the poll results as a forecasting tool would be a surefire way to losing big money quickly.
Poll results in a mean-reverting market
The indicator derived from the sentiment poll may still offer value as a contrarian indicator but only in a mean reverting market and only during extreme readings.
For example, buyers would best be advised to load up longs when the green line is well below the red line.
Sellers would best be advised to load up shorts when the green line is well above the red line.
How do I know the market is trending or mean reverting?
The proprietary Clever Markets Regime Index helps traders identify if the market is mean reverting or trending.
Final Thoughts
For now, the sentiment poll should be treated as a behavioural snapshot, not a forecasting tool.
As the poll sample becomes larger and more sophisticated, forward-looking signals could emerge.
Until then, sentiment extremes can act as a warning bell in mean-reverting markets.