8. Sentiment Indicators
Sentiment is a reflection of how investors feel about the market. The classic interpretation of sentiment is that when investors are optimistic, the market is at a top, and vice versa when investors are pessimistic. But this is true only at market extremes. In between, sentiment can contribute to the market direction. Bullishness can be a strong force generating higher prices—until there is too much bullishness. What is “too much?” That is what a good sentiment indicator system should tell us.
Generally, sentiment indicators come in two styles: the opinion style and the action style. The opinion style is derived from either surveys of opinion or composites of others opinions. The Advisory Opinion survey of Investors Intelligence ...
Get Time the Markets: Using Technical Analysis to Interpret Economic Data, Revised Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.