A Very interesting way to measure market direction
A few weeks ago I have stated that the SP500 have some signs that the market will be bullish. I still favor this idea. Here I will try to describe a very interesting indicator, which has shown lots of merits. It is called the "Contrary" or "Sentiment" indicator. It is a contrarian strategy. When everyone follows an idea (i.e.market will go up), you should take the opposite view. Of course I am not saying that one shall ignore a well thought analysis. What I am saying is that most of the market sentiment bases on, well the sentiment of the mass. The mass does not make a thorough analysis but react with so called "gut feeling". I have seen this numerous times. I have even seen people putting an enormous amount of money on a stock as if they are betting on a horse. A well done market analysis shall be excluded from being part of a sentiment indicator. There are excellent sites for this type of analysis.(One of them is dailyfx.com/sentiment?utm_source=TradingView&utm_medium=Wagner&utm_campaign=eurusd1211).
Here I will give you a more basic way for the sentiment indicator. It is hidden within this very forum. You have to sum the ideas published here on this forum, in order to have a sentiment indicator. However you have to filter them and filtering is not that difficult. Count the comments (on a particular symbol like USDCAD) and mark the amount of bull versus bear ideas. Then filter them. The simple filter is to eliminate ideas which present well thought analysis substantiating their view with multiple signals and indicators. These won't help you, as those are mostly correct and common sense ideas. Try to find the ideas which give only just a buy or sell entry or based on just a simple indicator (such as one simple BAT or Gartley). Then create a ratio in between buy and sell. For example if the amount of those simple ideas are leaning more towards Buy then you should prepare to sell (of course after having your proper analysis at the same time) And here we go, you have a fantastic and working Sentiment indicator.
BTW, currently the SP500 sentiment indicator is over 90 Percent SELL. So it may be time to BUY!
Regards and good trades.
Here I will give you a more basic way for the sentiment indicator. It is hidden within this very forum. You have to sum the ideas published here on this forum, in order to have a sentiment indicator. However you have to filter them and filtering is not that difficult. Count the comments (on a particular symbol like USDCAD) and mark the amount of bull versus bear ideas. Then filter them. The simple filter is to eliminate ideas which present well thought analysis substantiating their view with multiple signals and indicators. These won't help you, as those are mostly correct and common sense ideas. Try to find the ideas which give only just a buy or sell entry or based on just a simple indicator (such as one simple BAT or Gartley). Then create a ratio in between buy and sell. For example if the amount of those simple ideas are leaning more towards Buy then you should prepare to sell (of course after having your proper analysis at the same time) And here we go, you have a fantastic and working Sentiment indicator.
BTW, currently the SP500 sentiment indicator is over 90 Percent SELL. So it may be time to BUY!
Regards and good trades.
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