Chapter 7. Sentiment
After studying this chapter, you should
• Understand what the term sentiment means
• Understand the concept of contrary opinion
• Be familiar with methods for measuring sentiment of uninformed and informed market players
Market sentiment refers to the psychology or emotions of market participants. Investor psychology is influenced by and is an influence on market activity. When investors are hopeful and optimistic, they buy stocks; this buying causes stock prices to rise, resulting in even more optimism. When investors are pessimistic and fearful, they sell stocks, driving prices lower; falling stock prices increases the fear level among investors.
What Is Sentiment?
Sentiment is defined ...