Some off topic posts are okay, but please prefix them 'OT:' in the subject.
- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 2
One of the best indicators is sentiment. The market does the opposite of what the sentiment is. In late December of 2021, the sentiment was bullish. Now it seems very bearish. Does anyone think that could mean we have a good year in the market?
No. of Recommendations: 1
I've always been uncertain what sentiment adds to price and volume as far as understanding the state of the market goes.
Sentiment seems to be another way of identifying turning points or reversals, a very common approach to investing, but not mine. My approach, which I learned on this board, is pure momentum-based trend-following, which is about looking for persistence. I'm definitely not a natural contrarian. When something is rolling, I want to be pushing!
Baltassar
No. of Recommendations: 8
To be able to purchase additional stock during the market having a poor sentiment, this requires you also to be out of the market in the present, in order to have that extra stock. Thus, that boils down to a market-timing mechanical process.
It is very difficult to have a successful market timing process, mostly because on average, the market moves up. The rules that take you out of the market (such as sentiment being high, for which we could use a proxy such as like RS52 of SPY exceeding a 20% rise) might produce a benefit, but they tend to over-reach their intended domain, and leave you out of the market also when it continues to climb.
Many investors stay 100% invested for this reason, and most of the really successfully ones have that record as a matter of hindsight observation. To have extra $X capital to invest when the market has low sentiment, they are required to remove $X capital out of the market earlier, which is difficult to do systemically such that the amount removed (and re-added later) has a higher return than just keeping that $X amount full invested.
- Manlobbi
No. of Recommendations: 0
One of the best indicators is sentiment.
Is this actually true? I've always heard it but it sounds like stock market legend. And if sentiment, by whatever means it's being measured, is bearish, when do you get back in? Not on Day 1. You'd have to let it 'bear' a while or you're just riding it down. That's how it seems to me. It might be a good adjunct indicator based on its degree and other factors to assess the top of a bubble or when capitulation might be imminent or in progress.
No. of Recommendations: 0
I've always heard it but it sounds like stock market legend. And if sentiment, by whatever means it's being measured, is bearish, when do you get back in?
When CNN's 'Fear & Greed Index reaches clearly into the 'Extreme Fear' zone would have been perfect each single time this year (at least: I don't know about before).
No. of Recommendations: 2
So far, so good. SPY is up 20% year-to-date.
DB2
