test sentiment in the market is one branch of technical analysis and a stronger emphasis on the way behavioral analysis investors. There are two main psychological factors that lead investors to make decisions - greed and panic. Taking also other aspects such as involvement in the market - positioning, rate of open positions, creates a psychological portrait of the overall market.
There are some basic rules of what is described in this analysis:
- a more profitable is to address the position in accordance with the so-called attitude. smart money, or large individual or institutional investors - the investment involved as paid work,
- taking positions contrary to the majority of individual investors called. retail traders, since statistically the majority of this group take the wrong decisions and lose money,
- when the overall sentiment in the market is bull and reaches extremes in relation to the previous day, before a warning is also in the extreme prices, this is immediately note - in the market bull, although formed to extremes in sentiment and so follow the money at once above.
So what is the conclusion of the analysis and the market?
Personally, I am not convinced of the opinion that the bull market began, not even saying that this is somehow detached from the fundamentals, but pumping the cash markets for print, has a short-term effect - if it runs out of fuel a rocket will fall down. Cash, of course, will be printed to the death, but the paper itself does not create jobs and economic theories promoted by Bernanke, do not give a perfect application because of the many variables.
See how the market reacts to every rumor and ploteczkę, traders in fractions of seconds can knock indices by a few hundred points. this is not a healthy situation. On the other hand, has long been working strategy of "buy every dip," and the bear market in such a situation would not have taken place. The situation with which we deal is a phenomenon and it is hard to compare the behavior of past investors. So far
SP500 1300pkt not permanently raised, which is the determinant of the psychological. Now traders play a very important level, said gold breached the level of 1325 and closed above it. The market does not give a clear signal to buy the risk and to dispose of their risk portfolios. I myself am curious to see how solve in this situation and play on the growth of small items.
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