Ancelotti have said it earlier that they won't be doing any more further signings after Rudiger deal completed so yeah he does believe in the squad he had. Just two additions and I think they have got a real strong squad there. Regarding yesterday's loss, it was just one goal and it came off after Rudiger made a mistake but overall Madrid did well out there holding Barca. I still think Madrid are still better than Barca even with all the additions.
Ancelotti looks confident now, and indeed it is a fact they are now quite ready to make another splash for next season.
Currently the Madrid squad is dominated by young players, so there will be interesting things in the next few seasons because if they find their best performance, Madrid's young players can make unexpected surprises.