Subject: Re: Bear Catchers
To follow up on a discussion about CNN's "Fear and Greed Index" (https://edition.cnn.com/market...) : This what I wrote

Buy at Index values close to 0 = The low point of 'Extreme Fear'
Sell at Index value close to 75

while having been perfect last year seems to be wrong for the upward market since March (Click on "Timeline" to see) as it's since a few days over 75 (82 now), with the market still going up.

So either the market trend inverts very soon (which would be amazing confirmation for this indicator) --- or what I wrote this time did not apply. If so I would still not throw this indicator out, but would rather modify what I wrote as there is a difference to the previous moves of the needle from "Fear" to "Greed" (again, click on "Timeline" to see): This time sentiment changed MUCH slower, it took much more time from "Extreme Fear" to the current "Extreme Greed". And that might explain a lot.

Theory: If sentiment abruptly changes from fear to greed it's unstable, doesn't cause real trust in the change, market participants mistrust the others that they don't change their minds tomorrow again. Result: Self-fulfilling prophecy. The lack of trust in the upward move causes it to end.

If on the other hand under constant mistrust the market slowly rises and sentiment slowly gets more and more positive it creates trust, creates a stable basis for the upward trend and the positive sentiment to continue.

In other words: CNN's sentiment indicator might be a fantastic predictor if not only seeing the absolute numbers but also taking account of the rate of change of sentiment, whether it's fast or slow.